Aloha Airlines cargo operations to liquidate

Today, April 28, 2008, Aloha Airlines notified the U.S. Bankruptcy Court of its intention to convert its Chapter 11 bankruptcy filing to a Chapter 7 filing for liquidation. The move came after both bidders for the cargo operation withdrew their offers. Subsequently, Aloha's lender, GMAC Commercial Finance, said it would no longer provide cash to the carrier to continue operations. Aloha had shut down its passenger operations at the end of March, but its cargo service had continued to operate.

An article about the shutdown of Aloha's cargo operations in the Honolulu Advertiser quoted an Aloha attorney, who said simply, "We don't have any money." With that, Aloha's dedicated inter-island cargo service, which had been operating since 1985, came to a final halt. The Advertiser article said:

The move will put 300 of Aloha's cargo employees out of work. It also could jeopardize the sale of its contract services to Los Angeles-based Pacific Air Cargo. Pacific Air last week agreed to buy the 1,100-employee aviation services unit, which handles baggage duties, ramp duties and other ground services for carriers that serve Hawai'i.

Early last week, the Aloha Airlines pilots' union, the Air Line Pilots Association (ALPA), asked the U.S. Bankruptcy court for a temporary restraining order and a preliminary injunction that would make the sale of Aloha's cargo operations contingent on retaining the contract between the airline and the pilots. Later in the week, the pilots' union also voted to authorize a strike if their contract terms were not met, but they also announced that they would not strike before they learned the outcome of this week's Bankruptcy Court proceedings. With the company in liquidation, all of that is now moot.

In a report to the members of the Aloha unit of ALPA, the leadership of the Master Executive Council (MEC) explained:

...We arrived at Bankruptcy Court for the conclusion of the TRO hearings at 2:00 PM Monday. As soon as the Judge took the bench, attorneys for Aloha Airlines asked for a one-hour delay in order to conduct an emergency conference call with the Aloha Board of Directors, the attorneys for GMAC (which has continued to provide financing during the bankruptcy), and the creditors committee.

The court proceeding resumed about 3:30 PM. At that time, the attorney for Aloha Airlines stunned the courtroom by announcing that GMAC was refusing to continue financing, and that Aloha Airlines was seeking immediate approval from the court to convert the proceeding from a Chapter 11 to Chapter 7 liquidation. According to the company’s attorney, one of the two bidders had withdrawn from the cargo auction process Monday morning…and the remaining bidder had withdrawn from the process approximately one hour prior to the hearing. It appears that, at the end, GMAC raised the minimum price that it would accept to release collateral and also asked for the prospective purchaser to be responsible for air cargo operating expenses during the transition period while the approved purchaser awaited any necessary regulatory approvals. GMAC was adamant that they would NOT continue providing financing.

The Creditors Committee attorneys requested that the Judge refuse the company’s request, arguing that the air cargo operation was profitable and should be funded while the auction proceeded. However, GMAC was adamant that they would not provide any additional financing. The Judge attempted to prod GMAC, but acknowledged that he was unable to force GMAC to provide additional operating financing during the transition to a new owner.

In the end, Judge King reluctantly granted the motion of Aloha Airlines to convert the proceeding to liquidation. An Interim Trustee from the Office of the US Bankruptcy Trustee was appointed to oversee the liquidation of the company. Aloha Airlines operations were immediately ceased. Afternoon cargo operations were cancelled.

The message from ALPA's Aloha MEC expressed concerns about issues ranging from retirement, to insurance, to the processing of pilots' training records; more immediately, union officials expressed uncertainty about whether the pilots will receive a final paycheck tomorrow.

Plans are to keep the ALPA office open during normal business hours. Aloha pilots are asked to remain in touch with the MEC.

[Photo Source]

UPDATE May 1, 2008: According to an article in today's Honolulu Advertiser, "Saltchuk Resources Inc. said it reached an agreement with Aloha and its chief lender GMAC Commercial Finance LLC to purchase the shuttered air freight operations... Saltchuk said it plans to hire existing Aloha employees but did not say if it would retain all 300 of the company's air cargo employees."

Aloha Airlines pilots ask U.S. Bankruptcy Court to enforce their contract terms

The Aloha Airlines pilots have asked a U.S. Bankruptcy Court for a temporary restraining order and preliminary injunction that would make the sale of Aloha's cargo operations contingent on abiding by the contract between Aloha Airlines and its pilots' union. Aloha Airlines ceased passenger operations on March 31, 2008. The sale of the airline's cargo operation is scheduled to take place later this week.

Aloha Airlines pilots, represented by the Air Line Pilots Association (ALPA), are asking the court to enforce contract provisions covering successorship and sales of Aloha's assets and operations, according to a news release issued by ALPA. The union asserts that Aloha management has repudiated the pilots' collective bargaining agreement during the past few weeks and has triggered a “major dispute” under the Railway Labor Act, which governs airline contract negotiations. ALPA alleges that the company "continues to ignore the pilots’ collective bargaining agreement by terminating pilots out of seniority order, recalling pilots out of seniority order, failing to respect job security provisions that require a prospective purchaser to employ the current pilots in seniority order, terminating the pilots’ health plan, and failing to provide furlough pay and benefits, among other actions."

“Our contract specifically outlines the steps that must be taken to protect pilot jobs,” said Capt. John Prater, ALPA President. “Aloha management signed this agreement with the pilots and ALPA is prepared to do whatever is necessary to ensure that Aloha management adheres to the contract and that our pilots’ jobs are preserved.”

ALPA claims that the Aloha management rebuffed the union's efforts to negotiate a smooth transition before, during, and after the sale of the cargo operations.

“Aloha’s flagrant disregard of our contract is outrageous,” said Capt. David Bird, chairman of the Aloha arm of ALPA. “Aloha’s actions not only affect our pilots’ job security, but jeopardizes the future of Hawaii’s cargo flying. We just want Aloha to abide by the contract it signed.”

The Aloha pilots are scheduled to meet today, April 23, 2008, "to discuss and conduct a strike authorization vote, the first step in calling a strike." ALPA warns that a strike may occur at any time following an affirmative strike vote.

ALPA has requested a hearing in U.S. Bankruptcy Court for 10:00 a.m. on Thursday, April 24 to address the temporary restraining order.

UPDATE April 24, 2008: In their meeting last evening, the Aloha Airlines pilots "voted overwhelmingly" to authorize a strike of the carrier's cargo operations, according to the Honolulu Advertiser. The news article also mentioned that "about 150 or half of Aloha's pilots participated in the three-hour meeting and that "some of the membership have been forced to leave the state for employment while others could not get to Honolulu for the meeting."

Most senior Aloha Airlines pilot commands final passenger flight

On March 31, 2008, Aloha Airlines operated its final passenger flight, Aloha Flight AQ 251 from Kahului, Maui to Honolulu. Aloha's most senior pilot, Captain Darryl Wong (pictured at right), was the pilot in command of the Boeing 737-200 for that historic flight. The final flight came just a day after Aloha Airlines announced it was shutting down its passenger operations.

News reports said that Captain Mike Moore had been scheduled to fly the flight, but had relinquished the cockpit at the last minute to Captain Wong, who joined the company in 1976. In addition to flying for Aloha, Wong is a major general in the Hawaii Air National Guard. "It was very nice that they wanted me to fly, so I was very honored," he said.

In the right seat of Flight AQ 251 was First Officer Tasha Kobashigawa, Aloha's most junior pilot. Ms. Kobashigawa, who used to be a news reporter for Honolulu TV station KITV, joined Aloha Airlines just four months ago. An article about Aloha's final passenger flight in the Honolulu Star-Bulletin quoted Ms. Kobashigawa, who said, "You get to a place where you think you're going to be for the rest of your career and in a blink of an eye it's gone. I'm going to stay in flying. It's my passion. I worked too hard to let it go."

Flight attendants on the final Aloha Airlines passenger flight were Renee Jewell, Steve Oshiro and Tori Swoish.

[Photo Source]

A Tribute to Aloha Airlines

Late last evening, March 31, 2008, Aloha Flight AQ261 arrived in Honolulu from Maui. It was Aloha Airlines' final scheduled passenger flight. Aloha had publicly announced the shut down of its passenger operations just two days ago on March 30, 2008.

Here's a video tribute to a great airline, produced by Aloha employees - the Aloha ʻOhana.



(If the video does not play or display properly above, click here to view it on YouTube.)

You might also want to have a look at the AQ ʻOhana's wonderful collection of photos of Aloha employees and their families on PBase.

As a Hawaii resident and long-time customer of Aloha Airlines, I'd like to say to all of the Aloha ʻOhana:

"Mahalo nui loa, me ko`u aloha. A hui hou."

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Related: Some earlier Aircrew Buzz articles that featured Aloha Airlines:

• Aloha Airlines No. 1 F/A retires after 50 years - November, 2007
• Aloha Airlines B737 becomes a flying work of art -  May, 2007.
• Aloha ʻOe: Aloha Airlines Shuts Down Passenger Operations - March, 2008

Aloha ʻoe - Aloha Airlines Shuts Down Passenger Operations

Today is a sad day in Hawaii. Aloha Airlines, which has been in business in the islands since 1946, announced that it is suspending all passenger operations as of March 31, 2008. The airline, which recently filed for bankruptcy, announced that all inter-island and trans-Pacific passenger services are slated to be shut down, a move that will affect about 1,900 employees.

On Friday, March 28, employees of Aloha Airlines staged a rally at the Hawaii State Capitol in Honolulu [photos] urging lawmakers to do what they could to save the airline -- and their jobs. Indeed, legislation that would have provided loan guarantees and certain tax exemptions was introduced late last week, and was to be heard during the coming week. A Pacific Business News (PBN) article about the legislation said:

House Bill 509 is modeled on 1993 legislation that was intended to help Hawaiian Airlines, which was struggling with financial difficulties at the time.

The bill's first hearing is before the Senate Committee on Ways and Means.

A Senate spokesman told PBN that, if passed by both chambers, HB 509 could be submitted for Gov. Linda Lingle's signature as early as April 9. The guarantee would take effect immediately.

PBN reported that language in the bill's draft says issuance of a loan guarantee is "in the public interest and for the public health, safety and general welfare of the state."

While well-intentioned, help from the Hawaii State Legislature apparently came too late. The airline said "Aloha ʻoe" [farewell] earlier today.

In an Aloha Airlines news release about the suspension of its passenger service, David Banmiller, the carrier's president and chief executive officer, said:

Despite the groundswell of support from the community and our elected officials, we simply ran out of time to find a qualified buyer or secure continued financing for our passenger business. We had no choice but to take this action.

“We deeply regret the impact this will have on our dedicated employees who have made Aloha one of the best operating airlines in the country. “Aloha Airlines was founded in 1946 to give Hawaii’s people a choice in inter-island air transportation.

Unfortunately, unfair competition has succeeded in driving us out of business, bringing to an end a 61-year-old company with a proud legacy of serving millions of travelers in the true spirit of Aloha. ”We realize that this comes as a devastating disappointment to our frequent flyers and our loyal business partners who have supported this company for many, many years.”

Aloha's recent filing for Chapter 11 Bankruptcy protection cited financial difficulties due to fierce competition, and record-high fuel prices. This was the second time that Aloha Airlines filed for reorganization under Chapter 11 in the past three years.

Aloha's air cargo and aviation services units will continue to operate while the U.S. Bankruptcy Court seeks bids from potential buyers. So far, one such bid has been announced. On March 27, 2008, Saltchuk Resources, Inc., announced its intention to buy Aloha’'s air cargo business. Saltchuk is the parent company of Young Brothers Ltd., an inter-island ocean freight shipping company in Hawaii.

Aloha Airlines No. 1 flight attendant retires after 50 years

Patti Smart, the Number One flight attendant at Aloha Airlines, is retiring -- reluctantly -- after more than 50 years of service. The woman nicknamed the 'Queen of Aloha' will retire this coming Friday, but she says, "There will be sparks flying from my feet as they drag me down the runway."

Ms. Smart, whose hire date was Jan. 28, 1957, reminisced about her early flying days in an article in the Honolulu Star-Bulletin:

A lot has changed since the old days, when people dressed up in hats and bow ties to fly on propeller-powered planes across the Pacific.

"You're supposed to have the same niceness, the same warmth, the same caring. But it's faster now," Smart said. "In the older days, the flights were longer so you had more time to be intimate with passengers and you got to be very good friends with them."

While she must have a million good stories to tell from those 50-plus years of flying, she did share this funny one with the newspaper reporter.

As she was serving pineapple juice to passengers, she spilled it all over her uniform. She changed into a pair of pants and washed out her skirt in the lavatory. When she tried to air-dry the skirt by letting it flap out the window in the cockpit, one of the two pilots snatched it and let it fly out the window.

"I wanted to kill those two. I wanted to get their two heads together and whack them. They were laughing and laughing," she said.

The joke didn't stop there. Another pilot on the next flight out radioed her plane and said he had caught the skirt as it went flying by.

Perhaps that incident happened while she was working on a DC-3 early in her career. She certainly has seen a lot of changes to the airline industry since then -- including the introduction of jet aircraft.

Congratulations and aloha to Patti Smart as her long career in the air comes to a close.

Click here to watch a KITV News Video about Patti Smart's final flight on Aloha Airlines.


Click here for many more photos of Patti Smart, the Queen of Aloha.

[Photo Source]

Aloha Airlines Boeing 737 becomes a flying work of art

An Aloha Airlines Boeing 737-700 has begun service as a flying work of art. The aircraft, hand-painted by well-known marine life artist Wyland, is being billed as part of an effort to preserve Hawai'i's unique marine life and ocean environment by raising public awareness of them.

A page on the Aloha Airlines website about the newly painted aircraft says:

In a traditional blessing ceremony, Aloha bestowed the name Koholalele on the jetliner, which will fly between Hawai'i and the West Coast. The name Koholalele (literally "flying or leaping whale") honors the humpback whale, an ancient visitor to Hawai'i, considered by Hawaiians to be a kupuna, or elder, in its own right. Koholalele also is a place name for an area along the Hamakua Coast of the Big Island and the name of a wind that "leaps over the land" like a flying whale.

Both sides of the airliner's fuselage portray examples of marine life found in Hawai'i, including several endangered species, and some creatures unique to the islands. A large photo of the aircraft on the Aloha Airlines website shows humpback whales, two species of dolphins, a tiger shark, a Hawaiian monk seal, a green sea turtle, a Laysan albatross, and a species of reef triggerfish endemic to Hawaiian waters known locally as the 'humuhumunukunuku apua'a' (yes, really!). Visit the page and click on the animals to display a description of each.

Plane spotters on both shores of the Pacific will be watching for this uniquely painted aircraft. For the record, its registration number is N748AL.

[Photo Source]

UPDATE Sept. 3, 2007: This post was selected for the first Carnival of Aloha, a showcase of Hawaii bloggers hosted by Homespun Honolulu. Go on over there and check out the great selections from blogs about visiting and living in Hawaii. (And thanks to Evelyn for including The Aloha Airlines flying work of art in the blog carnival.)