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The Honolulu Advertiser
Posted on: Saturday, May 3, 2008

ALOHA CARGO
Aloha cargo service back in full swing

By Rick Daysog
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

A handful of jets flew out Thursday night after a deal was reached to purchase Aloha Airlines' cargo division.

JOAQUIN SIOPACK | The Honolulu Advertiser

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One day after getting a reprieve in federal bankruptcy court, Aloha Airlines' cargo division went into full throttle, operating more than a dozen flights yesterday.

Aloha rehired nearly all of its 300 cargo employees as of yesterday morning, and many of its major customers — including Love's Bakery, Armstrong Produce and McKesson Drug Co. — had come back to the airline for their cargo needs.

Mike Coffman, the former senior vice president of Aloha's airline operations, was named president and chief executive officer of a new company that will eventually run Aloha Cargo, which will be renamed Aloha Air Cargo.

"I would categorize the reaction here as euphoric," said Coffman, who will head Aeko Kula Inc., a division of Aloha Cargo's buyer, Saltchuk Resources Inc. "It's now at full speed."

It's been a wild week for Aloha Cargo, its employees and customers.

On Monday, the cargo division shut down after its chief lender cut off funding. Aloha Airlines, which ended its passenger service on March 31, had said it would be able to sell the cargo operation, and the shutdown came as a surprise to many.

The cargo employees were left without jobs and its customers were sent searching for alternative ways to ship goods. Aloha Cargo had handled 85 percent of the state's interisland air cargo shipments.

On Wednesday, Aloha CEO David Banmiller said a sale of Aloha Cargo still might be possible. Late Thursday an agreement was reached, and a handful of cargo jets flew out that night. Yesterday, the company was getting back to normal.

Aloha now is working to complete the sale of its cargo unit for $10.5 million to Seattle-based Saltchuk, which is the parent company of Young Brothers/ Hawaiian Tug & Barge. The sale is expected to close on May 14.

Aloha's day-to-day functions are being conducted by a court-appointed trustee, Dane Field, who has retained Aloha's senior management.

Coffman said Aloha flew between 13 and 15 interisland cargo flights using four Boeing 737-200 jets yesterday.

The sale to Saltchuk could lead to the termination of Aloha's collective bargaining agreements with its pilots' and machinists' unions.

That move is being opposed by Aloha's pilots' union. Between 30 and 40 of Aloha's pilots are needed to fly its cargo operations.

Aloha's return was welcomed by many of the company's longtime customers.

Kevin Shigemura, vice president of Armstrong Produce Ltd., the state's largest produce wholesaler, said his company shipped slightly less than 10,000 pounds of produce last night, which is about the company's regular weekend shipment.

Shigemura said that many of his company's customers — which include hotels, restaurants and retailers — were able to get along with less during the past week but were worried about the longer-term impacts of not having a stable air cargo business.

"Many of them are relieved that it's back to normal now," he said.

Aloha, which does not fly its cargo planes on weekends, will resume flying overnight mail on Monday. The weekend mail will be handed by Aloha's subcontractors.

Mike Walters, president of Love's Bakery, which is Aloha's largest customer, resumed shipments on Aloha last night.

Love's, which flies about 18 tons of bread and other baked goods every weekday to the Neighbor Islands, had to fly its products to Los Angeles on Delta Air Lines, which would then carry the goods to Maui, the Big Island and Kaua'i.

But one of the Thursday shipments bound for Kona got hung up, forcing the company to truck the baked goods from Los Angeles to San Francisco, where they were loaded on a plane bound for Kona, Walters said.

"It's been a learning experience but I don't know what you take away from it," Walters said. "I don't think you're going to go through this twice in a business career."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.