Aloha Airlines' plan confirmed; new pilot labor agreement reached

By Caroline Salls

Pittsburgh, Nov. 30 - Aloha Airlines' plan of reorganization was confirmed Tuesday by the U.S. Bankruptcy Court for the District of Hawaii, setting a course for the airline to exit from Chapter 11 as early as Dec. 15, according to a company news release.

Pending ratification of a new labor agreement by Aloha's pilots and resolution of some issues, the plan will enable the Yucaipa Companies, Aloha Aviation Investment Group and the Ching and Ing families to recapitalize the company with a combination of $50 million in equity and up to $50 million in debt financing.

Aloha Airlines and the Air Line Pilots Association (ALPA) Council 80 also reached a tentative agreement on a new contract on Tuesday.

Upon ratification by the ALPA membership and court approval, the agreement covering 270 Aloha pilots would run through April 30, 2009.

Although details were not disclosed, president and chief executive officer David A. Banmiller said the agreement between Aloha and ALPA provides for the possible termination of the pilots' defined-benefit plan.

However, the agreement also contains a unique provision whereby the plan could be permanently frozen, or restored to frozen status, if Congress enacts legislation to allow the nation's airlines to amortize their funding liabilities over a 20-year period.

"Aloha's agreement with ALPA could well set a pattern for other airlines pursuing reorganization," Banmiller said in the release.

"We will work closely with ALPA to actively urge Congress to pass this legislation to help Aloha's pilots and their colleagues throughout the industry."

With the tentative agreement, ALPA becomes the fifth and final of Aloha's bargaining units to reach new agreements and support the company's plan of reorganization.

The Association of Flight Attendants ratified a new contract on Nov. 29. The International Association of Machinists and Aerospace Workers Lodge 141 and Lodge 142, and a unit of the Transport Workers Union earlier ratified new contracts.

All of the contracts are subject to bankruptcy court approval and run through April 30, 2009.

ALPA Council 80's master executive committee, which also announced its support of Aloha's plan of reorganization, unanimously endorsed the tentative agreement.

Aloha Airgroup, a Hawaii corporation, is the parent of Aloha Airlines. Aloha Airlines operates commercial air transportation services and is based in Hawaii.

Aloha Airgroup filed for Chapter 11 Dec. 30, 2004. Its Chapter 11 case number is 04-03063.

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