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The Honolulu Advertiser
Posted on: Thursday, December 4, 2008

Sale of Aloha brand criticized

By Rick Daysog
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

The former owner of Aloha Air has offered to license the logo and name to the parent of go! airlines for 10 years at $600,000 a year.

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Hawaii news photo - The Honolulu Advertiser
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If go! airlines were to change its name to Aloha Airlines, it would be insensitive to former Aloha workers, a federal judge said yesterday.

U.S. Bankruptcy Judge Lloyd King postponed until at least Feb. 19 any decision on the sale of Aloha's brand and logo to the company's former rival, Mesa Air Group Inc., owner of go! airlines.

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

"How about all of the people whose lives have been devastated by this?" King said. "Is this just about money?"

Aloha shut down in March and terminated 1,900 workers in the state's largest mass layoff. Aloha said it was forced to close in part because of a nearly two-year fare war started by go! that cut interisland ticket prices to $39 one way.

Aloha's former owner, Yucaipa Co., reached an agreement this week to sell the Aloha name and logo to Mesa for a minimum of $6 million, but the agreement needs the approval of the bankruptcy court.

Selling the name to go! would be a slap in the face of employees who worked hard over the past five decades to build the Aloha brand, said Randy Kauhane, assistant general secretary for the International Association of Machinists and Aerospace Workers District 141.

Kauhane said he has received hundreds of e-mails and telephone calls from former Aloha Airlines employees upset with the prospect that go! will end up flying under the Aloha banner.

"I think that would be the worst thing that could happen to us," Kauhane said. "The Aloha name means a lot to us."

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.

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 millions of dollars into the carrier when it brought it out of bankruptcy in 2006.

"They did everything they could to keep the airline alive," Klyman said.

Details of the 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 antitrust lawsuit against Mesa, which alleged that Mesa used confidential business information from Aloha to launch interisland carrier go! in 2006.

Jonathan Ornstein, Mesa's chief executive officer, declined comment. Derex Walker, a Yucaipa executive who attended yesterday's hearing, also declined comment.

Local aviation industry historian Peter Forman said the postponement could hurt Mesa's plans to obtain the Aloha brand.

The company's finances have deteriorated in the wake of soaring fuel prices and it faces the potential loss of a $20 million-a-month contract with Delta Air Lines.

During yesterday's hearing, King said the postponement was necessary to provide time to the various parties related to the bankruptcy to object. He said that he only learned the details of the licensing agreement from local media reports.

Hawaiian Airlines, which submitted a $575,000 bid in Tuesday's auction, said it shared King's concerns.

"It's sad to say it, but there will never be another Aloha Airlines," said Hawaiian's CEO, Mark Dunkerley. "Whatever the outcome, we hope it honors Aloha's good name."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.