Aloha Airlines wants
to give back 2 planes

The carrier plans to seek
court approval to reject
the planes' leases

Aloha Airlines is planning to ask federal Bankruptcy Court tomorrow for approval to reject leases on two of the 13 Boeing 737-700s that the airline uses on its trans-Pacific routes.

The company, which filed for Chapter 11 reorganization on Dec. 30, will return a plane to its largest aircraft lessor, GE Capital Aviation Services Inc., according to people familiar with the situation. In addition, Aloha will give back a plane to Dublin, Ireland-based RBS Aerospace. The return of the plane to RBS Aerospace was disclosed during a court hearing last week.

Aloha also has reached a new tentative agreement with its mechanics union, which last week rejected a previous contract. A ratification vote for the International Association of Machinists and Aerospace Workers Lodge 142 is scheduled for today. The airline has been looking for ways to cut costs and earlier reached agreements with unions representing the company's pilots, flight attendants, clerical workers and dispatchers. Aloha has said that the unions' members will take 10 percent pay cuts.

In addition, the airline has been trying to line up financing for interim relief, as well as agreements with its aircraft lessors. A 60-day exemption period that ends Monday would allow the airline's aircraft lessors to repossess their aircraft unless a modified lease agreement or extension is reached.

The status of Aloha's credit card agreements with First Hawaiian Bank, which processes the airline's Visa and MasterCard payments, and American Express also will be determined tomorrow.

Aloha hasn't needed as many 737-700s as it previously used since eliminating service earlier this year to the Marshall Islands and American Samoa.

The plane that Aloha is returning to RBS is the only aircraft it leases from that lessor. Aloha also is returning one of the nine 737-700s it leases from GE Capital. Additionally, GE Capital is the lender on a 737-200 that Aloha owns and is required to make payments.