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The Honolulu Advertiser

Posted at 11:13 a.m., Thursday, October 17, 2002

Aloha discussing pay-cut proposal

By Kelly Yamanouchi
Advertiser Staff Writer

Aloha Airlines said today it is in discussions with its employees' representatives on pay cuts to improve its eligibility for a federal loan guarantee.

The airline early this month updated its financial plan for the loan to include $37 million in concessions from employee pay cuts over three years.

Aloha initially applied for a $45 million federal loan guarantee with the federal Air Transportation Stabilization Board on June 27.

"We looked at those applications that have been successful and those that have not been successful and came to the conclusion that it would be appropriate for us to enhance our financial plan by including concessions prior to the consideration of the application by the board," Aloha's president and chief executive Glenn Zander said today. "We are not planning any layoffs."

Aloha's situation comes amid continuing turmoil in the airline industry. Major carriers this week have begun reporting dismal earnings, still reflecting slumping travel demand after the Sept. 11 terrorist attacks.

Other carriers ­ including the nation's largest, United Airlines ­ also are seeking federal loan guarantees. United also has been in talks with its unions on concessions it says it needs to get approval for the loan.

Zander said Aloha has been meeting with leadership of its four unions since Sept. 25 and the two sides are in continuing negotiations. They have not yet finalized any pay cuts, he said. Generally, union membership must approve concessions before they take effect, he said.

"I would characterize it as a positive exchange of views," Zander said. "It wasn't rancorous."

Union representatives did not immediately return calls today.

Zander declined to detail the extent of the pay cuts the company is seeking. He said that even if the federal loan guarantee is rejected, the pay cuts ­ if ratified by all of the unions ­ could remain in place.

Aloha's application for the loan also includes concessions from its security holders and lessors, he said.

Zander said he has told union representatives that he is seeking an equal percentage of pay cuts for every group, which would apply to every employee, including nonunion employees.

Any pay cuts would not happen until all of the unions approved them, he said. Aloha has approximately 3,000 union and nonunion workers.

Aloha's unions are the International Association of Machinists and Aerospace Workers, the Association of Flight Attendants, the Air Line Pilots Association and the Transport Workers Union.

The last pay cuts at Aloha Airlines were about 20 years ago, Zander said.

Reach Kelly Yamanouchi at 535-2470, or at kyamanouchi@honoluluadvertiser.com.