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No Winner For Aloha Air Auction Of Cargo Division

Groups Including Creditors, Government Fight Auction

POSTED: 9:21 am HST April 21, 2008
UPDATED: 8:31 pm HST April 21, 2008

A bankruptcy auction in San Francisco on Monday failed to come up with a top bidder for the cargo operation at Aloha Airlines.

However, sources said there was a winning bidder for Aloha's other remaining division -- contract services, which handles ground operations for a variety of other airlines in Hawaii.

Little information has been released because lawyers representing companies interested in buying the remaining parts of Aloha Airlines met in an attorney's office in San Francisco for an auction that was closed to the public.

Two bidders competed for Aloha's cargo division, but the auction did not result in a high bidder and the auction will be put off, possibly until Tuesday, sources said.

Despite the two bidders, many parties in the Aloha bankruptcy want the court to stop the auction.

Attorneys for the unsecured creditors' committee are asking the bankruptcy court to throw out the auction of Aloha's cargo division and start again. They said Aloha's rush to sell its profitable cargo arm has resulted in bidders' inability to gain basic financial information to evaluate whether to buy Aloha cargo.

Castle and Cooke Aviation Services said it dropped out of the bidding because it got late access to or never was able to review important documents like cargo contracts and leases.

The Air Line Pilots Association also asked the court to block the cargo sale, claiming Aloha has broken its collective bargaining agreement by retaining junior pilots and firing senior pilots.

The federal government objected to the cargo auction as well, saying Aloha cannot transfer a Federal Aviation Administration operating certificate to a successful bidder. The new company would have to apply itself and then gain FAA approval.

It is not yet known why the auction of Aloha cargo failed to yield a winning bidder or why it is being put off for another day. The airline, its lenders and other creditors have asked lawyers and others involved in the auction not to speak to the media.

Sources tell us that a Hawaii-based company called Pacific Air Cargo was the high bidder to buy Aloha's contract services division. Founded in 2000, Pacific Air Cargo flies 747s, offering air cargo service between Los Angeles and Honolulu, as well as Guam and American Samoa.

Beti Ward owns the company. Pacific Business News voted her company Hawaii's No. 1 woman-owned business five years in a row between 2002 and 2006.

Aloha's contract services division serves more than 20 domestic and international air carriers in Hawaii, handling passenger check-in, baggage, mechanic work and other ground services.

Aloha laid off nearly 2,000 employees earlier this month when it shut down its passenger service because of escalating fuel costs and what management claims was "predatory pricing" by go! Airlines.


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