Pilots union puts off strike

The decision is made to wait and see how bidding discussions proceed this weekend

Aloha Airlines' pilots union said yesterday it will hold off striking until at least Monday, when it gets an update in Bankruptcy Court on discussions between the company and two prospective buyers for the cargo operations.

Saltchuk Resources Inc., parent of Young Bros. Ltd., and Jupiter Holdings LLC were identified as the two bidders.

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Aloha Airlines' pilots union told a federal Bankruptcy Court judge yesterday that its cargo pilots will not strike until at least Monday afternoon, when it returns to court to be updated on weekend discussions between the company and two prospective bidders for the cargo operations.

The pilots overwhelmingly gave their authorization Wednesday night for the Air Line Pilots Association to call a strike if an agreement is not reached on the pilots' collective-bargaining agreement.

But ALPA attorney James Linsey said after the hearing that despite the union's "compelling" case for a job action because of how Aloha has "ripped up" the pilots' agreement, the union was "turning the other cheek" again.

"We want to give the constituencies an opportunity yet again to hopefully solve this problem through negotiations," he said.

One day after Saltchuk Resources Inc. said in a news release that it was pulling out of the bidding for the profitable cargo unit, Aloha attorney Paul Singerman informed the court yesterday that Saltchuk, parent company of interisland shipper Young Bros. Ltd., remained as one of two bidders. However, Saltchuk said through a spokeswoman later yesterday that its situation had not changed and it was no longer a participant.

Singerman identified the other bidder simply as Jupiter, whose last known bid was $13.65 million.

Two people familiar with that bidder said it was Jupiter Holdings LLC. One of the principals of that company is Hawaii businessman Rick Cho, who is active in high-tech ventures and is a shareholder and owner of Honolulu-based PacifiCap Group, an Asia-Pacific focused private-equity firm based in Honolulu and Silicon Valley.

Saltchuk, which initially bid $13 million, walked out of the cargo bidding auction Monday when Aloha's primary lender, General Motors Acceptance Corp., informed Saltchuk that the minimum starting bid was $20 million. However, Saltchuk never requested to have its deposit returned, leading some to believe that Saltchuk was still interested in the cargo unit, according to people familiar with the situation.

Singerman told Bankruptcy Judge Lloyd King that Aloha would continue to negotiate with Saltchuk and Jupiter over the weekend and would inform the court of the status of those talks at a hearing set for 2 p.m. Monday.

A hearing on "dueling TROs," as one attorney put it, also was postponed until Monday after beginning yesterday with ALPA attorney John Dean, a senior contract administrator, giving testimony on how Aloha has allegedly violated the pilots' contract. Both Aloha and ALPA are seeking temporary restraining orders and preliminary injunctions against each other.

Aloha is seeking a TRO and preliminary injunction against the cargo pilots to prevent them from striking or engaging in any disruptive work action.

ALPA is seeking its own court orders requiring the company to make any sale of Aloha's cargo operations contingent upon the buyer retaining the union's 40 cargo pilots. Linsey said that the pilots' agreement regarding asset sales requires that the pilots go with the aircraft if at least 20 percent of the company's assets are transferred. In this case all of Aloha's cargo operation, including its airplanes, is being transferred.

"The pilots have given hundreds of millions of dollars in concessions in helping this company through bankruptcy one and through bankruptcy two, and they don't want to be left behind," Linsey said.

But Aloha labor attorney Sheldon Kline said that the sale must constitute 20 percent of the company's assets in a rolling 12-month period and that the company's position is that the successorship provision was not met.

Linsey also said that the company terminated -- rather than furloughed -- about 260 pilots, depriving them of recall rights if senior pilots who are being trained to fly the cargo planes retire or move on to other jobs.

Kline said ALPA should have filed grievances as is specified in the pilots' agreement, but Linsey called the argument "ludicrous" because the company "has violated the collective-bargaining agreement from Page 1 to Page 510, and we'd be hearing grievances through five years."

Separately, GMAC agreed yesterday to allow Aloha to tap $622,000 from ongoing operations to meet expenses through the end of the day on Monday. Without the additional cash, Aloha would have run out of money yesterday.