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Aloha wins OK to restart cargo unit ahead of sale

May 06, 2008|From Reuters

Aloha Airlines Inc., the Hawaiian carrier that ceased passenger flights after filing for bankruptcy protection, won court approval to restart its profitable cargo unit as part of a planned sale of the division to Saltchuk Resources Inc.

U.S. Bankruptcy Judge Lloyd King in Honolulu approved the resumption of cargo operations late last week. Sen. Daniel K. Inouye (D-Hawaii) urged Saltchuk to reverse an earlier decision to drop an offer, the company said.

Seattle-based Saltchuk, which owns inter-island cargo firm Young Bros., retracted its $13-million bid last month after Aloha's main lender, GMAC, set a minimum price of $20 million. As part of the new sale agreement, Saltchuk cut its price to $10.5 million and GMAC has agreed to the deal, according to court papers.

A hearing on the proposed sale has been set for Monday.

Aloha stopped passenger flights March 30, 10 days after filing for bankruptcy protection for the second time in three years. It blamed rising fuel costs and a passenger-fare price war triggered by Mesa Air Group's Hawaiian unit Go.

The carrier ceased cargo operations April 28.

Aloha Air Cargo, which handles 85% of Hawaii's inter-island shipping, will retain its name and be operated by newly formed Saltchuk subsidiary Aeko Kula Inc., according to a statement Sunday.

The company's Chapter 7 trustee Dane Field and Saltchuk President Tim Engle didn't return calls for comment.

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