honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Updated at 1:49 p.m., Wednesday, December 3, 2008

Judge blasts effort to sell Aloha Airlines name to Mesa

By Rick Daysog
Advertiser Staff Writer

A federal judge today sharply criticized efforts to license Aloha Airlines' brand name to the carrier's nemesis, Mesa Air Group Inc., saying the deal is insensitive to former Aloha workers.

U.S. Bankruptcy Judge Lloyd King postponed until at least Feb. 19 any decision on the sale of Aloha's intellectual property to Aloha's former majority owner Yucaipa Cos.

King said that "Mesa and go! have been given credit for the demise of Aloha" and that licensing the brand name to Mesa would takes the "Aloha name and stand it on its head."

"How about all of the people whose lives have been devastated by this," King asked lawyers for Yucaipa. "Is it just about money?"

Aloha shut down for business in March and terminated 1,900 workers, in the state's largest ever mass layoff.

Robert Klyman, an attorney for Yucaipa, said that his client has been sensitive to the plight of Aloha's former workers and that Yucaipa poured in millions of dollars into the carrier to bring it out of its first bankruptcy in 2004 and preserve the airline's jobs.

Yucaipa, headed by California billionaire Ron Burkle, was the high bidder for the Aloha name in an auction held yesterday, offering $750,000.

Yucaipa is offering to license the Aloha name to Mesa for a minimum payment of $600,000 a year under a 10-year agreement. Yucaipa will receive much as 1 percent of its annual ticket revenue on its interisland service for using the Aloha brand name in the deal.

Details of licensing deal are part of a settlement agreement between Mesa and Yucaipa. The Advertiser reported last week that as part of the settlement, Mesa agreed to pay Yucaipa $2 million and issue 2.7 million shares of Mesa stock, or about 10 percent of the company's outstanding shares, to Yucaipa

The deal resolves Yucaipa's anti-trust lawsuit against Mesa, which alleged that Mesa used confidential business information about Aloha to launch interisland carrier go! in 2006.

Jonathan Ornstein, Mesa's chief executive officer, declined comment.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.