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Aloha Asks Judge To Force Cargo Pilots To Work

2 New Companies Interested In Buying Cargo Division

POSTED: 1:25 pm HST April 1, 2008
UPDATED: 8:44 pm HST April 1, 2008

Aloha Airlines on Tuesday asked a bankruptcy court judge to force pilots to work at the cargo division one day after the company ended passenger flight service.

Aloha's attorneys told U.S. Bankruptcy Court Judge Lloyd King they wanted to prevent the Air Line Pilots Association, International from "disrupting the cargo operations."

Aloha attorney Sheldon Klin said the pilots "threatened to disrupt and stop our cargo operations."

ALPS's lawyer Richard Seltzer said he disagreed with the factual and legal allegations. He said he only heard about the allegations 10 minutes before Tuesday morning's hearing.

The union said the airline violated its contract by allowing junior pilots to continue flying cargo while senior pilots were laid off Monday.

About 30 pilots work in Aloha's cargo operation, which is the airline's most profitable division. They fly 85 percent of the state's air cargo and make a profit of about $6 million a year.

The pilots said there is a big problem.

"The Airline Pilots' Association expects the company to adhere to the collective bargaining agreement," Aloha pilot union representative John Riddel said.

The pilots said Aloha is violating its union agreement and should allow more senior pilots who've been fired from the passenger operations to bump less-senior pilots in the cargo operation.

"I don't blame them for their frustration because in essence, seniority means a lot, but it also means a lot in terms of practicality and economics," Aloha Airlines President and CEO David Banmiller said.

The pilots union said interisland pilots fly the same type of aircraft as the cargo planes so they would not need additional training.

"The entire foundation of the Airline Pilots Association is to protect all members starting from the top of the seniority list to the bottom of the seniority list," Riddel said.

"Each party, as is often the case, has legitimate concerns, and we hope we're able to resolve them," Banmiller said.

During testimony, it was revealed that two new companies are interested in buying Aloha's interisland cargo air shipping business.

Castle and Cooke Aviation Services, a division of Castle and Cooke, and Kahala Capital said they are interested in joining the bidding for the cargo operations.

Saltchuk Resources of Washington state offered to buy the operations for $13 million last week.

The cargo division makes about $6 million a year and employs about 400 people, according to court filings.

An auction for the cargo business is scheduled for April 14. The bidding would begin at $13 million and must go up by $600,000, according to court proceedings.

An attorney for one of the new bidders asked for the auction to be delayed to give the companies more time to assess Aloha's financial situation.

"The rush to dispose of this is beyond my experience," bankruptcy attorney Richard Wagner said.

"Why is an emergency sale necessary?" said Christopher Prince, attorney for Aloha's unsecured creditors.

Aloha attorney Paul Singerman said that while the cargo division is profitable, that profit is not enough to support the other operations.

During the morning proceedings, Aloha attorneys informed the court that the company has about $2.5 million in cash remaining. Without a cash infusion, the remaining part of Aloha can not operate beyond a few weeks, Singerman said.

The hearing was scheduled to resume in the afternoon.

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