Aloha Airlines resumes
talks with holdout union

Aloha Airlines, which has been racing to get through bankruptcy since its Dec. 30 filing, is considering whether to reject the lease of one of the planes it uses for trans-Pacific flights.

The company also has resumed talks with its mechanics and inspectors unit after backpedaling on its Thursday night announcement that it would file a motion seeking to impose a contract on the group after union members rejected a tentative agreement.

Attorney Walter Davison said in federal Bankruptcy Court yesterday that Aloha has told Dublin, Ireland-based RBS Aerospace that the airline may give back a Boeing 737-700 that it leases from RBS.

Overall, Aloha leases 13 737-700s for mainland flights and 14 Boeing 737-200s for its interisland flights. The availability of one less plane could force the airline to change the frequency of one of its mainland routes. Additional layoffs also could be possible.

Aloha spokesman Stu Glauberman declined to comment.

Aloha is facing a Feb. 28 deadline to reach agreements or extensions with its dozen or so aircraft lessors to avoid the possibility that the lessors could repossess their planes.

The airline also has now received ratified contracts from four of its five unions after the Transport Workers Union, which represents the airline's dispatchers, approved a new 52-month contract on Thursday. Aloha's ratified agreements cover 94 percent of the airline's union work force.

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Hawaiian Airlines profit
drops on higher fuel costs

Hawaiian Airlines said yesterday its operating profit fell in January for the fourth time in five months.

The carrier, which will mark its two-year anniversary in bankruptcy on March 21, posted a 38 percent drop in operating profit to $3.7 million from $6 million a year ago. Revenue rose 5 percent to $62.9 million from $59.9 million.

Hawaiian and union leaders of the Air Line Pilots Association met this week in a last-ditch effort to avoid a hearing Tuesday that would determine whether the company can impose a contract on the pilots. The airline also is without a ratified contract with its flight attendants and has been talking with that group as well.

The pilots and flight attendants have balked at reaching an agreement because they said that the company is making money. Hawaiian's unrestricted cash level rose about $3.5 million in January to $114.1 million. The airline had $87.7 million at the beginning of 2004.

Despite the cash improvement, Hawaiian Airlines trustee Joshua Gotbaum is concerned about high fuel costs and other expenses, as well as inroads that other carriers are making into Hawaii.

"The people of Hawaiian are doing a fantastic job serving our customers, but there's no denying that competition's getting tougher," Gotbaum said.

Despite a slight improvement in labor costs, Hawaiian's overall expenses last month increased 10 percent from a year ago to $59.2 million. Fuel costs during that period climbed 31 percent to nearly $12.1 million.

Hawaiian's net income last month fell 82 percent to $588,000 from $3.3 million a year ago.

The airline said its revenue per available seat mile last month was flat compared with a year ago while its cost per available seat mile rose by 5 percent.