A federal judge has approved Aloha Airlines Chief Executive Officer David Banmiller's employment contract, which calls for him to receive more than $500,000 a year in salary and housing allowances.

U.S. Bankruptcy Judge Robert Faris said yesterday that Banmiller's compensation package was reasonable given the importance of his role in steering Aloha through the bankruptcy process.

"No one has questioned Mr. Banmiller's experience, his expertise and the vital role he is playing in this case," said Faris.

Banmiller will earn $455,400 in base salary this year and will be entitled to more than $1 million in severance over two years should he lose his job if Aloha emerges from bankruptcy under new ownership.

Banmiller, who owns 5 percent of Aloha's stock, also is entitled the use of a car and $90,000 a year in housing allowances. He currently lives in rental housing provided by Aloha at a rate of $42,000 a year.

Attorneys for Aloha's unionized workers objected to Banmiller's severance package, saying it comes at a time when airline employees have taken steep cuts. But Sheldon Kline, Aloha's attorney, defended the contract terms as necessary to retain an executive of Banmiller's background.

Banmiller, who was named Aloha's chief executive officer in November, has more than three decades of experience in the airline industry, including stints as president and CEO of Sun Country Airlines and Pan American World Airways.

Kline compared Banmiller's total compensation with the multimillion dollar packages paid to top executives at American Airlines, United Airlines and Delta Air Lines.

The approval of Banmiller's contract comes as Aloha is seeking new investors or a new owner to emerge from bankruptcy protection.

James Peck, an attorney for Ableco Finance LLC, complained about a "lack of progress" in attracting new capital. Ableco and Goldman Sachs Credit Partners LP in March provided the airline with $65 million in interim financing.

Aloha attorney Paul Singerman disclosed during yesterday's hearing that the airline is in discussions with an investment group, which he declined to name due to a confidentiality agreement. Singerman added that the airline continues to hold discussions with more than 30 potential investors that it has contacted since it filed for bankruptcy in December.