Aloha Airlines infusion
a step closer

Aloha Airlines, needing $10 million by the end of the month to meet expenses, received Bankruptcy Court approval yesterday for a bidding process that will provide the airline with a $65 million loan or alternative financing.

MatlinPatterson Global Opportunities Partners II LP has until next Friday to file a commitment to fund its $65 million term loan proposal -- or a revised offer -- that is part of a $90 million package MatlinPatterson offered late last month.

If MatlinPatterson gives the commitment but another group tops the company's offer, the airline would have to pay MatlinPatterson a $1.8 million break-up fee.

An auction is scheduled for March 23 to select a winning bidder to loan money to the company. Aloha can pay qualified bidders up to $500,000 for expenses.

Brett Miller, the New York-based attorney who represents the airline's unsecured creditors' committee, said the bidding and auction process "will create the greatest potential to maximize profitability for the estate."

Ted Pettit, local counsel for the creditors' committee, said the committee believes that the amount of unsecured claims against Aloha is "well in excess of" $50 million.

Aloha, which reported in a court filing Thursday that it had an operating loss of $1.7 million in January, has said it hopes to be out of bankruptcy before July. The airline is attempting to reach a ratified agreement with the union representing mechanics and inspectors, who rejected two previous tentative agreements. The airline earlier reached ratified agreements with its unions representing pilots, flight attendants, dispatchers and clerical workers.