Interisle airline The proposal to merge Hawaii's two major interisland airlines appears dead after Hawaiian Airlines' board of directors decided not to extend a key date for the deal to be completed.
merger dead
Hawaiian Airlines votes not
to extend the April 18 deadlineBy Craig Gima
cgima@starbulletin.comThe proposal to combine Hawaiian and Aloha airlines into a single entity had been generating rising opposition from passengers, lawmakers and labor unions concerned about the effect of a lack of competition on prices and schedules.
"It's clear that the parties are not going to meet the terms of the agreement," Hawaiian Airlines spokesman Keoni Wagner said last night.
In a press release, Hawaiian Airlines Board Chairman John W. Adams said his airline rejected an April 18 deadline extension.
Hawaiian, Aloha and TurnWorks Inc., a Texas-based company working to merge the two companies, had determined the deadline would not be met for several reasons, including the expected time required to obtain necessary approvals and reviews, Hawaiian Air said.
"We continue to believe that a merger with Aloha would be in the best interest of the two companies and their constituencies," Adams said in his announcement.
"With this in mind, the parties had some discussions regarding a potential extension of the April 18th outside date. However no agreements could be reached," he said.
"We believe that the outside date as originally agreed to by all of the parties was an important element of the merger agreement," Adams said.
Wagner said most deals have a deadline as the parties have to weigh expenses incurred in getting a deal done versus the increased risk of the deal not going through.
A spokeswoman for TurnWorks said, "We're extremely disappointed" in the decision.
Aloha spokesman Stu Glauberman said, "Aloha is aware of the decision by Hawaiian Airlines, and will issue comments at the appropriate time."
Richard Port, a spokesman for Citizens for Competitive Air Travel, a group opposed to the merger, said it was "very pleased" by the news that the deal had fallen through.
"I think the citizens of Hawaii indicated that they didn't want a merger that resulted in a monopoly of the airline system, which is basically our only way of getting between islands," Port said.
Aloha and Hawaii unveiled the proposed merger in December, saying it was necessary for the financial health of both companies.
The merger would have created a new company, Aloha Holdings Inc., to be headed by Greg Brenneman, TurnWorks' chairman and chief executive. He helped lead Continental Airlines to its turnaround as president and chief operating officer.
The combined company would have become the nation's 10th largest carrier with annual revenues of about $1 billion. Hawaiian Airlines employs about 3,100 employees while Aloha has about 3,000 workers.
The airlines said the merger would result in savings of about $90 million.
Since then however, class-action lawsuits seeking to block the merger were filed in state court on behalf of several groups, including employees and shareholders.
On Tuesday, three state Senate committees took up a resolution opposing the merger.
"My resolution is moot, then," state Sen. Cal Kawamoto, chairman of the Transportation Committee said last night. "I'm glad the merger is not going through."
The current attempt to consolidate Hawaiian and Aloha airlines is by no means the first.
The competitors have seriously discussed a merger three times, as far back as 1970 and again in 1988 and 1998, and there have been additional reports of one side or the other sending out feelers.
