State may oppose airline merger

By Frank Cho
Advertiser Staff Writer

Gov. Ben Cayetano said he was reconsidering his support for the proposed merger of Aloha and Hawaiian airlines after Aloha's chief executive officer disputed reports that his airline was on the verge of failure.

The governor earlier supported the merger, saying one airline would fail if the two did not combine.

Glenn Zander, Aloha Airlines' president and chief executive officer, said a "myth" was being created that portrayed a strong Hawaiian bailing out a "poor, loss-making" Aloha.

"This is simply not the case," Zander wrote in an Advertiser column Tuesday.

"Mr. Zander has been saying that, and if what he has been saying is true, then the state is going to reassess its position on this whole merger business," Cayetano said.

"Maybe Mr. Zander was concerned about his reputation," Cayetano said. "But the books pretty much speak for themselves. They both posted tremendous losses. And if now he is saying Aloha is a healthy and viable proposition, then why should we support the merger?"

Hawaiian and Aloha airlines proposed a merger of the two carriers last month after suffering losses in the wake of Sept. 11 that forced both airlines to lay off hundreds of workers and cut back on flight schedules. The merger proposal was led by Greg Brenneman, head of Texas-based-Turnworks Inc., the executive who would be heading the new merged airline.

The combining of Hawai'i's two interisland airlines — which still needs both federal and state regulatory approval — would create the nation's 10th largest airline but leave the Islands with only one major local carrier for the first time in more than five decades.

"We hope the governor will continue to support the merger because of its long-term benefits to the state," said Paul Casey, Hawaiian Airlines CEO.

Brenneman and Zander were not available for comment.

A spokeswoman for Sen. Daniel Inouye said the senior Hawai'i senator still suports the merger.

"The senator really thinks this (merger) is in the best long-term interest of the state. Which one is weaker is not a factor," said Jennifer Goto Sabas, chief of staff for Inouye.

Meanwhile, state Sen. Cal Kawamoto, chairman of the Senate Transportation Committee, said he planned to introduce a resolution opposing the merger.

The three state Republican senators have asked the U.S. Justice Department to block the merger.

The Associated Press contributed to this report.

Reach Frank Cho at 525-8088 or at fcho@honoluluadvertiser.com.