Aloha Air loses bidder for cargo

The pilots union votes on whether to authorize a strike

Saltchuk Resources Inc., parent company of interisland ocean shipper Young Bros. Ltd., officially withdrew yesterday from the bidding for Aloha Airlines' cargo unit just hours before Aloha's pilots voted overwhelmingly to give their union authorization to call a strike.

Seattle-based Saltchuk said it was unwilling to raise its $13 million bid to the $20 million threshold required by Aloha's primary lender.

Aloha also is seeking a court order against the cargo pilots to prevent them striking or disrupting operations.

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The parent company of interisland shipper Young Bros. Ltd. officially withdrew from the bidding yesterday for Aloha Airlines' cargo unit because it said it was unwilling to raise its bid over a competing offer or increase its bid to the $20 million threshold required by Aloha's primary lender.

Saltchuk Resources Inc.'s withdrawal came hours before Aloha's pilots voted overwhelmingly last night to give their union authorization to call a strike if a labor agreement is not reached with the airline.

The Air Line Pilots Association said the vote for authorization would give it the right to strike at any time, but the union and the company are both due in federal Bankruptcy Court in Honolulu at 2 p.m. tomorrow for a hearing on temporary restraining orders and preliminary injunctions that they have sought against each other.

"Our goal is not to stop and destroy the company," ALPA attorney John Dean, a senior contract administrator based in San Francisco, said yesterday. "Our goal is to reach a mutually satisfactory resolution. But it's not easy when they don't return calls and they've ignored us for the better part of two weeks and expedited the sales of assets."

Meanwhile, a separate hearing is scheduled for this morning at Bankruptcy Court in Oakland, Calif., on an offer from Los Angeles-based Pacific Air Cargo to buy Aloha's separate aviation contract services unit for $2.05 million, plus accounts receivable.

Seattle-based Saltchuk, which initially bid $13 million for the cargo unit and was instrumental in setting up the auction process, said the other bid was for $13.65 million. Saltchuk and Aloha did not disclose the other bidder's identity.

Saltchuk's withdrawal leaves a cloud over the auction process since lender General Motors Acceptance Corp.'s minimum starting bid of $20 million was not reached. As it is, Saltchuk stands to recoup up to $400,000 in expenses from Aloha for helping put together the auction procedures.

The pilots are threatening to strike because they say Aloha has refused to adhere to a provision in ALPA's collective-bargaining agreement covering successorship and sales of Aloha's assets and operations. ALPA argues that Aloha's pilots, in seniority order, must be retained by any new buyer if the assets are sold.

Aloha, however, argues that there is nothing in the agreement that requires the company to force a purchaser to assume the agreement or to hire specific pilots based on seniority. The complaint filed yesterday by the company against ALPA seeks a temporary restraining order and preliminary injunction against the cargo pilots to prevent them from striking or engaging in any disruptive work action.

Aloha's request was expected since ALPA had sought its own temporary restraining order and preliminary injunction two days earlier. ALPA requested in a motion filed Monday that the court make any sale of Aloha's cargo operations contingent upon the buyer retaining the union's pilots. ALPA said in that motion it has the right to strike any or all of Aloha's operations at any time after the authorization vote.

The potential strike date was moved up from a previous deadline of 12:01 a.m. this Saturday because, ALPA said, the company's "total disregard" for the collective-bargaining agreement had triggered a "major dispute" under the Railway Labor Act, which governs airline contract negotiations.