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 | May-02-2008Seattle-based company to buy Aloha Airlines' cargo operation(topic overview) CONTENTS:
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The carrier, which flies 85 percent of all air-delivered freight between the Hawaiian Islands, was in talks with at least two groups to sell the cargo operations. The Star-Bulletin, using an unnamed source, reports that Aloha's cargo operations could be resurrected by Seattle-based Saltchuk Resources without Aloha's pilots and possibly begin flying this afternoon, according to the source. Saltchuk, the parent of interisland ocean shipper Young Bros., has offered $10.5 million, plus $4 million of accounts receivable, and has been told by the Federal Aviation Administration that its operating certificate would be expedited. The newspaper also reports that Aloha today will ask the federal bankruptcy court to expedite the sale of its aviation contract services unit to Los Angeles-based Pacific Air Cargo, which also operates in Hawaii. [1] King said there did not seem to be anything that could be done legally to stop the shutdown. "We've known for quite some time this was a day-by-day case. and that what happened today was a possibility, but because it's a grim possibility, it still takes us by surprise," King said. "I'm sorry for the hardship this bankruptcy case has imposed on so many people. I've been a bankruptcy judge since 1975, and I've never seen anything like this." Aloha's aviation contract services employees will find out their fate after the probable interim trustee, Dane Field, confers with Aloha's lender, General Motors Acceptance Corp. The sale of the contract services unit to Los Angeles-based Pacific Air Cargo was approved Thursday but was not supposed to close until this Monday. It was unclear yesterday whether GMAC would continue funding the operation, but the union leader overseeing contract services instructed those employees to continue working to avoid a disruption until a determination could be made. "I told them to work at least for (last night) until we get our readings better," said Randy Kauhane, assistant general chairman of the International Association of Machinists and Aerospace Workers, District Lodge 141. Gov. Linda Lingle said she was disappointed an agreement could not be reached for Aloha to continue cargo operations. She added many shippers that used Aloha cargo have been exploring options since the original bankruptcy filing and have made contingency plans with other air or sea carriers. "We are also concerned, of course, for the. employees and their families," Lingle said in a statement released through her office.[2]
Aloha Airlines and its lender, GMAC Commercial Finance LLC, plan to ask federal Bankruptcy Court Judge Lloyd King today to expedite the closing of the contract services unit to Los Angeles-based Pacific Air Cargo, the source said.[3] Federal Bankruptcy Judge Lloyd King, invoking his power in a situation that he called 'extraordinary," overrode the objections of U.S. Trustee Carol Muranaka and ordered this morning that Pacific Air Cargo's deal to purchase Aloha Airlines' aviation contract services unit be completed today rather than Monday as scheduled. King made his decision after Aloha's appointed Chapter 7 trustee, Dane Field, declined to participate in the case until a pay dispute could be resolved over compensation to his attorney and other professionals needed to administer the case. Field has five days, or until Sunday, to accept his appointment that was made Wednesday morning.[4] If newly appointed Chapter 7 trustee Dane Field does not approve the expedited sale of the contract services unit to Pacific Air Cargo, then Aloha and GMAC plan to ask King to order that the sale be approved by Carol Muranaka, assistant U.S. trustee for the District of Hawaii, according to the source. The contract services deal, for $2.05 million, plus accounts receivable, had been scheduled to close this Monday to allow for a 10-day objection period.[3] King says the latest developments won't affect the sale of Aloha's contract services division to Pacific Air Cargo for $2.2 million. That division, which takes care of baggage handling and other ground services in Hawaii for Japan Airlines, United Airlines and other carriers, was nominally profitable. It employs about 1,100 people.[5]
HONOLULU -- A day after Aloha Airlines cargo business closed one company sent in a 727 jet to begin interisland cargo service. The same company that is buying Aloha's Contract Services Division, which handles ground services for 20 airlines in the state, Pacific Air Cargo prepared to fly two runs overnight.[6] One piece of Aloha Airlines has survived -- the contract services department that handles baggage, check-in and cleaning for several other airlines. The court-approved buyer of that division wouldn't officially take over until May 5th but has a message for customers and 1,100 employees: It's business as usual; everything will be taken care of. Pacific Air Cargo is swamped -- not just in the sudden burst of interisland cargo this usually mainland-route company has started taking, but also getting ready for the 1,100-employee Aloha Airlines division it intends to buy.[7]
HONOLULU -- A bankruptcy court judge on Thursday approved the sale of Aloha Airlines' Contract Services Division to Pacific Air Cargo.[8] HONOLULU -- Hundreds of Aloha employees lost their jobs this week as the airline began its conversion from Chapter 11 bankruptcy to Chapter 7. 400 Aloha employees were released after the airline shut down its cargo division, which handles 85 percent of all air cargo between the islands, KITV reported. Aloha attorney David Farmer said on KITV 4 Island Television News This Morning that 950 employees of the Aloha Aviation Contract Services division have lost their jobs as well. He retracted that statement later, saying he was wrong.[9] "The agents are very dedicated to our operation. They help to make things go smoothly," said Debbie Damas, an employee of Omni Air, one of Aloha'''s contract services customers. '''There's a lot more than what they see going on behind the scenes, I think." Omni Air, which flies for Vacations Hawaii, is preparing its own computer system as a backup for check-ins just in case it's needed before the intended May 5th sale of Aloha'''s division to Pacific Air Cargo. "Hopefully we'll be able to still maintain that with the new owners, hopefully whoever they decide to hire," Damas said. Ward herself visited contract services employees at the airport to tell them keep it up -- the transition is near. "They said, thank you -- thank you for coming in and buying us, and we're excited we're happy, and what can we do to help you? And I said, you can just keep doing your job like you're doing,''' Ward said. '''Just keep servicing the airplanes, keep cleaning the airplanes, just keep this going, and they said, yes, we're going to do that."[7] The 950 employees of Aloha's aviation contract services unit continue to handle ticketing, baggage processing and cleaning for other airlines. That jobs may also be in jeopardy, however, because that unit is being sold to Pacific Air Cargo and the deal has not yet closed. Aloha's cargo unit grounded all flights after two potential buyers canceled their offers and Aloha's lender also pulled out.[10] Pacific Air Cargo said it is still on track to take over Aloha's Contract Services Division, which handles check-in, baggage and other ground services for 20 airlines. These employees were checking in passengers for an Omni Air flight to Las Vegas at midmorning.[6] Saltchuk also owns Northern Air Cargo, the largest cargo carrier in Alaska, which uses the same type of aircraft as Aloha. Aloha filed for bankruptcy and then closed down its passenger service in March. It has sold its contract services division to Pacific Air Cargo.[11]
Aloha's problems with the sale of the cargo division had been well known and players within the business had met with the state Airports Division as recently as a week and a half ago to discuss possible scenarios if Aloha stopped flying, said Brian Suzuki, president of Hawaii Air Cargo, the largest Hawai'i-based air freight forwarder. He said carriers such as Pacific Air Cargo, Trans Air Cargo, and Kamaka Air were polled on their ability to bring in extra aircraft and crews, while others talked about how they could use the Hawaii Superferry to ship goods between Maui and O'ahu. Suzuki said while Hawaiian Airlines is being eyed as a possible solution, its Boeing 717 passenger jets can only carry a limited amount of freight and shippers need to pass a security check.[12] Freight forwarders in many cases consolidate different shipments to go in containers on Young Bros. barges, but some are opting for the Superferry. A least a couple of major businesses, such as Love's Bakery, are taking advantage of the Superferry on the Oahu-Maui route. Love's Bakery President Mike Walters said his business has cut the cost of delivery (by Aloha Air cargo) in half by having a driver deliver products in a refrigerated truck to Maui. "It's an excellent partnership," Walters said. Maui resident Teena Rasmussen, co-owner of Paradise Flower Farms, said the Aloha shutdown forced her to look elsewhere, and she found a freight-forwarding business with refrigeration that could carry her carnations on the Hawaii Superferry for a lower price. Rasmussen said she is paying the introductory price of 15 cents a pound, instead of 50 cents a pound by air. "I'm really excited about it," she said. Rasmussen said she still has to use Hawaiian Airlines for air shipments to the Big Island and Kauai, and she will have to find a shipping alternative if the Superferry is unable to make a crossing in the winter. Some businesses say they are still hurting, and volume is down and costs are up, especially for perishable items shipped among the neighbor islands, including the Big Island and Hawaii. "It's very devastating," said Norma Acob, Commodity Forwarders regional manager. "I don't think the state of Hawaii did enough to head off this."[13] "They just left us high and dry," said Mike Walters, president of Love's Bakery, the biggest customer of the Aloha Cargo operation. "This came as a complete surprise to us because we were assured for the last month that they had a contingency plan." Walters, who said Love's filled six cargo flights each night to the Neighbor Islands, said the bakery had begun to move some of its shipments away from Aloha, such as using the Hawaii Superferry to Maui. The U.S. Postal Service also relied on Aloha to convey the bulk of its mail sent between O'ahu, Maui and the Big Island. Spokesman Duke Gonzales said the post office was attempting to put its contingency plans into effect. Others like Art Angel, president of Angel Freight Hawaii, said he had moved his air shipments to Hawaiian Airlines after hearing of Aloha's bankruptcy weeks ago.[14]
Aloha dominated the interisland cargo business, flying about 85 percent of the cargo between Oahu and Kauai, Maui and the Big Island. As of Tuesday, none of its competitors had committed to trying to fill the gap. Aloha's biggest customer, Love's Bakery of Honolulu, resorted to sending its baked goods on Delta Airlines to Los Angeles, then loading the goods aboard direct Delta flights to the Neighbor Islands. While state leaders said they were exploring options, no one had a plan. Gov. Linda Lingle said in a statement that the state has been in discussions with other cargo operators to find alternatives since Aloha filed for bankruptcy earlier this month and that many shippers have already made contingency plans with other carriers. Speaker of the House Calvin Say said he will be working with Neighbor Island lawmakers to find help for residents and businesses affected by the shutdown. "This is one more indicator that our economy is suffering, and that we need to be extremely cautious with spending going forward," Say said in a statement. "It is also a wake up call for all of us on the importance of our transportation infrastructure."[15] Saltchuk's latest offer is less than the $13 million it bid last month for the cargo business, which handled as much as 85 percent of all goods flown between the islands. The new lower price represents the loss of value that Aloha Cargo has suffered after its closure on Monday. During the past few days, major customers have turned to smaller airlines and freight companies to ship their products to the Neighbor Islands. Love's Bakery, Aloha's largest freight customer, said it has tapped local carrier Pacific Wings for some of its overnight freight and is in the process of turning over the bulk of the 36,000 pounds of bread products its ships daily to Young Brothers.[16]
We will make every adjustment possible to increase our cargo carrying capacity, but won't be able to fill the void with air cargo as we did with passengers." Government officials said they were concerned about employees as well as cargo customers. "This is a very unfortunate situation. I am concerned for both the employees of Aloha Airlines Cargo as well as for the many small businesses that will be impacted," said Maui County Mayor Charmaine Tavares in a statement. "Many small businesses, such as farmers with perishable cargo, rely on transporting their goods via air carriers, and the extent of the impact to the Neighbor Islands will need to be examined." Gov. Linda Lingle, who said she had been in contact with Tavares as well as Big Island Mayor Harry Kim and Kaua'i Mayor Bryan Baptiste, said she was disappointed that the cargo operations could not be salvaged.[17] "Hopefully there's some investors out there that realize the value of the employees at Aloha Airlines, all 3500, is a value you can never put a price dollar on," said Riddel. The company says it will convert its Chapter 11 case to Chapter 7 Liquidation, leaving 85% of Hawaii's air cargo, including mail to and from Maui and the Big Island, up in the air. Late Monday night, spokesperson from the postal service announced they will be able to continue delivering mail to Maui and the Big Island after all. Duke Gonzales said Corporate Air will take over, but he says there may be some delays the first few days while they iron out the kinks.[18] Alpine Aviation Inc. has added several flights to and from the Big Island, Maui and Kauai, as well as whole-aircraft charters between islands, said Wendy Lishman, company spokeswoman. Alpine, which operates Beechcraft 1900s and 99s, twin-engine turboprop airplanes that carry between 5,000 and 8,000 pounds, is considering bringing in additional cargo-dedicated aircraft to handle additional freight once it fulfills its obligation to the U.S. Postal Service, Lishman said. Kamaka Air Inc., which operates Douglas DC-3 propeller-driven aircraft and Beechcraft planes that can haul between 2,500 and 7,500 pounds, also is expanding its cargo operations, said Jim Petrides, general manager. The company already had plans to upgrade its fleet with three more Cessna 208B Super Cargo Master single-engine turboprop airplanes, the first of which arrives in July, he said. "Fortunately for us we do have the lift capability to double or triple our current capacity immediately," he said, adding that the company ran eight interisland flights yesterday compared with its normal four flights per day. It also began daily service to Maui yesterday, which it had planned to begin in July. Ned Laird, managing director and owner of Air Cargo Management Group, a Seattle-based aviation consulting firm that has worked with both Aloha Air's cargo operation and Hawaiian Airlines for years, said it is unlikely that a major cargo operator will come in and replace Aloha.[19] Hawaiian is also operating a larger Boeing 767 for Maui flights, but it is unknown how long the carrier will continue to schedule that flight and its added cargo capacity, Suzuki said. The other local air cargo airlines indicated they could increase service but that filling the void left by Aloha may take weeks, Suzuki said. He said yesterday Hawaiian Airlines stopped accepting cargo before 7 p.m. and that he was wondering what to do with a 300-pound pallet of freight for the Big Island. Among his ideas was a solution similar to Love's ' sending the shipment to the West Coast on United Airlines where it could be loaded onto the carrier's flight to Kona. He already had begun getting some Mainland shipments destined for the Neighbor Islands flown directly there.[12]
Tanja Janfruechte, spokeswoman for Los Angeles-based Pacific Air, confirmed the company's interest in the interisland cargo business but declined further comment about the company's plans. It was unclear yesterday whether Pacific Air was interested in buying Aloha's cargo unit or building its own service. The eight-year-old company previously shipped goods to the Neighbor Islands on Aloha's planes but does not have its own interisland cargo operations.[20] Since the Administration first became aware of Aloha'''s situation, Governor Lingle and her cabinet have been taking action. Even before Aloha'''s announcement on April 28, the Governor'''s directors of transportation, airports, harbors, tourism, agriculture, labor, human resources, business development, and others have been working closely with both the private and public sectors to ensure the continuity of cargo service in the event that agreement could not be reached on the sale of Aloha'''s cargo operations. State officials have been in ongoing discussions with other air and sea cargo operators, including Hawaiian, Pacific Air Cargo, Young Brothers and others to assist in developing contingency plans for increasing cargo capacity, such as adding flights, bringing in new aircraft, and making appropriate arrangements at airports and harbors to accommodate any change in service. The Administration has also been in close contact with key shippers who depend on interisland service, including the U.S. Postal Service and the agriculture industry, to facilitate their contingency plans to minimize disruption in the delivery of vital cargo.[21] The turmoil in the interisland cargo business prompted U.S. Congressman Neil Abercrombie to ask Gov. Linda Lingle yesterday to consider declaring a state emergency or disaster, saying "we absolutely cannot stand by and wait for medical equipment, pharmaceuticals or our food supplies to dwindle or run out." Abercrombie said such a declaration will allow the state National Guard to carry cargo among the islands if necessary. Lingle said she had no plans to make an emergency declaration and called Abercrombie's efforts to alert the secretaries of Defense, the Army, and Air Force and other federal officials an "overreaction." "I am confident that in the near- to medium-term, the market will stabilize and correct itself, and both carriers and shippers will make the necessary adjustments to ensure cargo capacity meets the demand for service," Lingle said in a news release. Banmiller said yesterday that he's been warning state officials for two years about the potential problems that would arise in the local community should Aloha go under. The problems that have arisen in wake of Aloha's failure should be no surprise to them, he said.[16]
The contract services unit handles ground operations for virtually all of the major domestic and international carriers flying into the state. The cargo operation, shut down Monday, could be resurrected by Seattle-based Saltchuk Resources without Aloha's pilots and possibly begin flying this afternoon, according to the source. Saltchuk, the parent of interisland ocean shipper Young Bros., has offered $10.5 million, plus $4 million of accounts receivable, and has been told by the Federal Aviation Administration that its operating certificate would be expedited, the source said.[3] Given the possible effect that any suspension of contract services work could have on the state's economy, the parties are seeking that the deal close today. Aloha's contract services unit, which handles ground operations for virtually all of the major domestic and international carriers flying into the state, performs such functions as ticketing and assisting passengers, baggage handling, directing planes to gates and cleaning aircraft. Those carriers affected are United Airlines, American Airlines, U.S. Airways, Japan Airlines, Air Canada, Korean Air and China Airlines.[3] Unclear was the fate of the aviation contract services unit, which provides ticketing, baggage handling and other functions for other carriers. Even though that unit was sold last week to Pacific Air Cargo, the deal isnt scheduled to close until Monday and there is no more funding to continue those operations.[22] The judge said that everything possible needed to be done to expedite the deal. Contract services workers continued working since Aloha ended its control and pay to its employees Monday. Pacific Air Cargo President and owner Beti Ward said she is thankful for the employees who kept working on her promise to pay them for their time once the sale went through.[8] The move will put 300 of Aloha's cargo employees out of work. It also could jeopardize the sale of its contract services to Los Angeles-based Pacific Air Cargo.[23]
Pacific Air Cargo, with offices in Los Angeles and Honolulu, bid $2.05 million for Aloha's contract services division.[24] Pacific Air Cargo bid about $2.2 million for the division last week. Pacific Air Cargo President Beti Ward said she has worked out details with the companies involved to keep operations and contracts going without interruption. The contract services division handles ground operations, including check-in and baggage for 20 other airlines such as United and Japan Airlines.[9] Pacific Air agreed last week to pay $2.05 million for Aloha's contract services division, which employs about 1,100 workers who handle ticketing, baggage services, ramp duties and other ground services for airlines that serve Hawai'i. The contract services division continues to operate despite a court-order allowing Aloha to wind down its operations and sell off its assets.[20]
In what could be a climactic ending to the Aloha Airlines bankruptcy case, the sale of the company's aviation contract services division could be finalized as early as today, while its cargo operation could be resurrected and possibly begin flying this afternoon without Aloha's pilots, according to a person close to the situation.[3] U.S. carrier Aloha Airlines closed its cargo operation Monday, affecting nearly 400 employees and cutting off nearly 85 per cent of air shipments between Oahu and Hawaii's Neighbour Islands. The decision to ground its cargo planes came during the hearing in Honolulu federal bankruptcy court on the question of whether Aloha's pilots could strike the cargo operation. Aloha lawyer Paul Singerman said he expected that Aloha's main lender, GMAC, wouldn't continue financing the airline. That moved the court case from a Chapter 11 bankruptcy proceeding to a Chapter 7 in which a trustee is appointed to oversee the sale of assets.[25] Aloha lawyer Paul Singerman told PBN there was a purchase agreement pending for the cargo operation but that it hadn't been completed. He said he expected that Aloha's main lender, GMAC, wouldn't continue financing the airline. That moved the court case from a Chapter 11 bankruptcy proceeding to a Chapter 7 in which a trustee is appointed to oversee the sale of assets. A person who answered the telephone at Aloha Airlines Cargo said she had been told the business was shut down immediately because the lender had cut off financing. "We're not accepting any new shipments," she said. Aloha shut down its passenger business on March 31 and planned to sell its cargo and ground-services businesses, both of which were profitable.[26]
Aloha Airlines' shutdown of cargo service left customers scrambling. Government involvement in problems of private business is generally frowned upon, but when an enterprise controls the lion's share of an essential service, it is incumbent on officials to make sure matters don't go awry and to prepare if they do. In the case of Aloha Airlines' cargo operation -- which transported a whopping 85 percent of goods between islands before its shutdown -- state leaders apparently neglected to keep abreast of a precarious situation and to take actions that might have lessened the damage to the numerous customers who relied on Aloha. The airline's second bankruptcy declaration and the termination of passenger service more than a month ago should have been unsettling enough for lawmakers and Gov. Linda Lingle to be keenly mindful of the conditions of its remaining operations.[27] At the Honolulu International Airport, many of Aloha's cargo employees were in tears. They just received notice of the closure late afternoon, so it came as a surprise, especially since there were two investors willing to buy the company's cargo division. One of the remaining divisions left standing after Aloha Airlines shut down its passenger service is now at its end, leaving at least 300 cargo employees without a job. "Many of our pilots have left for job interviews abroad, international interviews, and they're probably sitting with their families right now discussing the very same thing right now. It's a sad day in the history of Aloha Airlines and another sad day for our state," said John Fiddel, a former Aloha Airlines pilot.[18] Saltchuk, the same company that owns young brothers. is still expressing interest in buying the Aloha Air cargo division. Aloha Airlines Cargo shut down operations monday and 3-hundred employees lost their jobs.[28]
Forget the ocean breezes, the beautiful sites, the beach. Monday was a bad one, with bankrupt Aloha Airlines Inc. converting its case from Chapter 11 to Chapter 7. The Honolulu-based airline was forced to shut down its air cargo division, which had carried 85% of Hawaii's inter-island cargo, after GMAC Commercial Finance LLC pulled the plug on the use of cash collateral because GMAC was not guaranteed a minimum of $20 million.[29] Saltchuk had bid $13 million for the cargo unit. April 25, 2008: Aloha says it received an offer of $13.6 million from Jupiter Holdings Group for its cargo division. April 28, 2008: Aloha shuts down its cargo division, which carries 85 percent of all goods by air between the islands. Aloha said its lender, GMAC Commercial Finance LLC, was unwilling to provide further financing and rejected the $13.6 million Jupiter bid.[30] Saltchuk Resources, which bid $13 million for the cargo unit but later walked away from the deal, has been holding talks with Aloha's chief lender GMAC Commercial Finance LLC, the person familiar with the deal said. The shutdown of Aloha's cargo division on Monday threw more than 300 people out of work and sent retailers and wholesalers scrambling for alternative ways to move their products between islands.[31] Seattle-based Saltchuk Resources Inc. is offering to pay more than $10 million for the cargo unit, according to people familiar with the deal who asked not to be identified because the sale has not been finalized. Aloha's abrupt shutdown of its cargo unit Monday night threw more than 300 people out of work and forced businesses to find new ways to ship products between the islands.[16]
In the latest twist involving Aloha's cargo operations, the same source said that Aloha and GMAC are close to having a signed letter of intent from Seattle-based Saltchuk Resources, parent company of interisland ocean shipper Young Bros. That deal with Saltchuk, which walked away last week from bidding for the cargo unit, would be for $10.5 million, plus $4 million of accounts receivable.[3] Jupiter had bid $13.65 million for the cargo unit but Aloha's lender, GMAC Commercial Finance LLC, nixed the deal after calling for a minimum bid of $15 million. Customers said they would welcome a return of Aloha Cargo. While many of the small local carriers have ramped up their cargo service to meet the immediate crisis, it's not enough to fill the void created by the loss of Aloha's freight business, which included six Boeing 737-200 jets flying 216 flights per week. "This relieves the pressure," said Kevin Shigemura, vice president of Armstrong Produce Ltd., the state's largest produce wholesaler.[16]
Aloha and its lender, GMAC Commercial Finance LLC, plan to ask federal Bankruptcy Court Judge Lloyd King in a hearing today to expedite the closing of Aloha's aviation contract services unit to Los Angeles-based Pacific Air Cargo, according to a person familiar with the situation.[3] Los Angeles-based Pacific Air Cargo agreed last week to buy the contract services division. A: The Aloha pilots union wanted its members, who had been fired from the passenger services division, to have the option to fly cargo jets.[32] The shutdown could also jeopardize the sale of Aloha's 1,100-employee contract services division to Los Angeles-based Pacific Air Cargo.[33]
There is word that the Contract Services Division sale has gone through. Saltchuk, the parent company of Young Brothers, released a press release this morning announcing it has obtained the consent of GMAC to acquire Aloha Air Cargo assets.[34]
The auction ended with no winner. Saltchuk President Tim Engle said his company's interest was revived by the efforts of Sen. Daniel Inouye, D-Hawaii, and his staff. "We re-engaged in our efforts to acquire Aloha's air cargo operation after Sen. Inouye personally called us shortly after the shutdown of operations earlier this week," Engle said in a news release. "He was greatly concerned about the 300 jobs and the vital service that Aloha Air Cargo has provided for the people of Hawaii and asked we try once again to see if we could make something happen," he said.[11] Top Aloha Cargo pilots made in the neighborhood of $120,000 a year while top-paid pilots at Saltchuk's air cargo operation in Alaska make less than half that at about $55,000 a year. Saltchuk officials said they would offer comparable wages to Hawaii pay scales. The attorney appointed as the bankruptcy trustee, Dane Field, said he is unsure as to whether he will take the job. He has five days to decide. Field said he is concerned that he and GMAC cannot agree to operating conditions. "How am I supposed to administer this case without money to pay professionals to run operations," Field told the judge.[35]
Aloha carried 85 percent of interisland air cargo before it stopped the service Monday. Both The Honolulu Advertiser and the Honolulu Star-Bulletin are quoting sources as saying Saltchuk would pay more than $10 million for the cargo operation.[36] Even though GMAC had at one point requested $20 million from Saltchuk, the second-highest bidder at $13 million, the source said that GMAC was willing to accept a lesser amount now because the Federal Aviation Administration said it is willing to expedite the certification necessary to run cargo. Saltchuk would operate under Aloha's operating certificate until Saltchuk can obtain its own certificate in about two weeks, the source said. Unlike the high bidder -- Jupiter Holdings Group LLC, which had bid $13.65 million -- Saltchuk has experience in cargo through its operation of Northern Air Cargo in Alaska.[3]
Today Saltchuk said in a statement it has obtained the consent of GMAC to proceed with the transaction. 'We reengaged in our efforts to acquire Aloha's Air Cargo operation after Sen. Inouye personally called us shortly after the shutdown of operations earlier this week,' said Saltchuk President Tim Engle.[37] HONOLULU - Saltchuk Resources Incorporated of Seattle, Wash., has agreed and has obtained the consent of GMAC Commercial Finance to the transaction, to purchase the assets, equipment and service lines of Aloha Air Cargo.[34]
Aloha's six cargo aircraft carried an estimated 85 percent of non-postal service air cargo shipments, typically ferrying time-sensitive goods back and forth between Honolulu and the Neighbor Islands.[12] '''Probably just look at other airlines for now,''' customer Jeff Fong said. Loves Bakery sends 38 percent of its goods to the neighbor islands and recently began sending products to Maui on the Superferry as well. but the shut down of Aloha'''s cargo services caught them off guard. '''The ramifications to our customers and all the consumers on the neighbor islands it's overwhelming. 22,000 pounds a day, 6 planes a day we used,''' Love'''s Bakery President Mike Walters said. Loves says they were working on a contingency plan for the past 6 months but they thought they would have more time to get everything in order.[38] "I didn't want to be caught holding the bag." Inouye, who ships about 10,000 pounds of flowers and plants weekly, said he needs to get products to customers within two days, whether that be in Honolulu or somewhere on the Mainland. Therefore, using interisland barge service provided by Young Brothers Ltd. wouldn't suffice, he said. Love's has been looking at Young Brothers for its Big Island and Kaua'i shipments as part of its contingency planning. It had begun shipping its goods to Maui on the Superferry on Sunday. It is now having to come up with and accelerate other plans after being blindsided by Aloha, Walters said. He said the company already was considering freezing baked goods and using Young Brothers for those Neighbor Island markets because the fuel surcharges on Aloha were getting too high. Walters said he and his staff were planning to brainstorm through the night at Love's Middle Street facility to come up with ideas for the shipments.[12]
Aloha's cargo division transported a wide variety of items, including all mail to and from Maui and the Big Island, as well as produce and fresh flowers. Gov. Linda Lingle said she was in contact with the mayors of Maui, Kauai and the Big Island to see what they could do to ensure continued interisland air cargo service.[5] Aloha carries 85 percent of the state's interisland air cargo, including all mail to and from Maui and the Big Island.[5]
Aloha provided 85 percent of the cargo to and from the neighbor islands including U.S. Mail to the Big Island and Maui. A U.S. Postal Service spokesman says Corporate Air will be taking over the routes to the Big Island and Maui, they anticipate a quick adjustment to the change and minimal impact.[38]
Aloha, which carries 85 percent of all goods by air between the islands, said its lender, GMAC Commercial Finance LLC was unwilling to provide further financing. Aloha, which shut down its passenger service on March 31 and laid off 1,900 workers, flew an afternoon cargo flight today, but the fate of its nighttime shipments was unclear at this time.[23] "Since Aloha first announced it was filing for bankruptcy, the state has been in discussions with cargo operators to identify other alternatives for the transportation of goods between the islands. Many of the shippers that use Aloha cargo service have made contingency plans with other air or sea carriers," she said in a statement. Lingle said the state activated its multiagency Rapid Response Team to help the 300 employees and their families. "The Rapid Response Team, led by the Department of Labor and Industrial Relations, will survey workers to evaluate their job skills and determine what type of job placement assistance might be needed.[17] Aloha Air Cargo planes sat empty while laid off employees worked for free helping customers pick up their unshipped goods all while the state barricaded their terminal from the rest of the airport. This as business owners went to Hawaiian Air Cargo and found out it's not so easy to switch shipping companies.[39] Aeko Kula, Inc., the newly Saltchuk Hawaiian-formed subsidiary, will conduct the air cargo business and intends to hire out of the existing Aloha Air Cargo work force. "These folks know the business and the customers and have done an excellent job providing the service that Aloha's Cargo customers have appreciated for over 20 years. With these efforts we hope to further our deep and long-term commitment to the Hawaiian Islands," Engle said.[34]
WAILUKU Freight-forwarding businesses and the Hawaii Superferry are bridging the gap left by the closing of Aloha Airlines' cargo services, and Pacific Air Cargo will soon be shuttling large amounts of refrigerated perishables.[13] Freight-forwarding businesses and the Hawaii Superferry are bridging the gap left by the closing of Aloha Air's cargo services, and Pacific Air Cargo will soon be shuttling large amounts of refrigerated perishables on a Boeing 727 scheduled to arrive last night from the mainland.[3]
The uncertainty that has threatened Hawaii's airport operations and disrupted interisland air cargo shipments might be resolved today in what could be a dramatic twist in the Aloha Airlines bankruptcy case.[3] HONOLULU -- The parent company of Hawaii's biggest interisland ocean shipper announced Thursday it had worked out a deal to buy Aloha Airlines' cargo operation, which shut down Monday.[11] Acob said interisland air freight is being moved primarily on a space-available basis, raising major worries among shippers of perishable products. Hawaiian Airlines spokesman Keoni Wagner said his business has been trying to accommodate the increase in passengers and cargo since Aloha Airlines shut down its passenger and freight operations.[13]
In a press statement, Saltchuk President Tim Engle credited U.S. Sen. Daniel Inouye, D-Hawaii, with helping to broker the deal. Aloha Airlines Cargo, which carries 85 percent of interisland goods shipped by air, closed Monday after GMAC pulled its financing.[24] Aloha Airlines' cargo operation accounted for about 85 percent of all goods shipped by air between the islands.[17] Four weeks ago Aloha Airlines suddenly shut down its passenger service in the Pacific, but it left its vital inter-island freight service in operation. The other shoe dropped yesterday when Aloha Airlines shut down its inter-island air freight service, effectively grounding 85 percent of all inter-island air shipments including UPS, FedEx, the U.S. Postal Service, fresh and perishable foods, and so on.[40] Saltchuk Resources is a Northwest-based holding company that began marine transportation operations in 1982. It also owns Hawaii Fuel Network, Maui Petroleum and Minit Stop Stores. Aloha Airlines shut down its passenger service March 31, blaming high fuel costs and interisland competition.[24] Maui Mayor Charmaine Tavares said the impact will be especially hard on local entrepreneurs and farmers who rely on Aloha's daily service. "I am concerned for both the employees of Aloha Airlines cargo as well as for the many small businesses that will be impacted," Tavares said. Founded in 1946, Aloha was the state's second-largest airline until it shut down its passenger service on March 31 and terminated 1,900 employees.[33] '''My whole success has been consistency and quality,''' Haines said. '''That'''s the way I compete and how I stay in the market.''' Haines said he and his partner spent much of Monday night and Tuesday morning talking about what they were going to do, and discussing it with their distributer, Local Island Fresh Edibles on Oahu. '''We were tense,''' he said. '''We were frantically trying to work this out.''' They decided to go with Young Brothers Inc. and place their goods on a barge for shipment. Haines said he'''s used the service before and never got complaints about his produce. '''I think it might be cheaper, I'''m not sure, but we'''ll give it a try,''' he said. In retrospect, Haines said he wished he had approached Hawaiian Airlines earlier when he sensed trouble at Aloha, which laid off approximately 1,900 workers statewide after the airline shut down its passenger service on March 31. He estimated it could take as long as a month to set up shipping arrangements with Hawaiian. Monden said he was sad that his seven-year working relationship with Aloha cargo ended so abruptly. '''I feel bad for the guys who lost their jobs,''' he said. '''We really got along with them.'''[41] "The timing of it all is very bad. I mean with the economy slowing down, fuel prices going up, both Aloha's passenger service closing down, ATA airlines closing down, the overall cost of doing business is going up and now they have to deal with this closure of the cargo service on Aloha Airlines is not good timing." He says the impact is also being felt by many retailers and wholesalers, and affected the movement of inter-island mail and the flow of cash between banks.[42] Hawai'i's economy, reeling from the loss of thousands of jobs with the demise of Aloha Airlines' passenger service, the closure of Molokai Ranch and NCL America's decision to pull out two of its ships, now faces the loss of a vital transportation link with the shutdown of Aloha's cargo operations.[33] LIHUE Dick Botti, president of the Hawaii Food Industry Association, said his constituents are already feeling the pressure of Aloha Airlines' cargo service shutdown in their grocery aisles, especially on Kauai. He is pushing for a return of the Hawaii Superferry to Kauai, something executives at the company would not rule out last night.[43]
Pacific Air Cargo, a Los Angeles company that operates five Boeing 747 cargo flights a week between Honolulu and California, said yesterday it is interested in possibly filling the void left by the closure of Aloha Airlines' cargo division.[20] Pacific Air Cargo is leasing a Boeing 727 freighter aircraft, which was expected to arrive in Honolulu from Oakland, Calif., today, to fill some of the void left by the shutdown of Aloha Airlines' cargo unit.[19]
HONOLULU Aloha Airlines' shut-down air cargo service is showing signs of life.[36] An Aloha Airlines cargo plane sits idle at Honolulu International Airport. Aloha, which carried 85 percent of interisland air freight, halted its cargo service yesterday.[33]
Hawaiian Airlines currently carries 8 percent to 10 percent of interisland air cargo compared with 85 percent for Aloha Cargo.[44] Fed Ex, UPS, to Pacific Air Cargo - just a day after Aloha Cargo shuts down, local carriers step in to take on the airlines stranded load.[45]
With the abrupt shutdown of Aloha's air cargo service, one last airline business is still operating -- at least for now.[10] '''I'''m ready to bring in a Cargomaster,''' the all-freight version of the Caravan. He is prepared to offer shippers service '''when they want it, 24/7.''' He said his conversations Tuesday showed him that consistency is what shippers value most. '''They have very significant, regular shipping needs on specific routes,''' he said. Mokulele Airlines, based in Kona, had announced earlier this year that it planned to bring in a Cargomaster for freight in alliance with Aloha. The Honolulu Star-Bulletin reported, Mokulele Chief Executive Bill Boyer said he would seek an alliance with whoever bought Aloha'''s cargo operation, or introduce a service later this month on his own. At that time, two bidders were after Aloha'''s cargo business, which its president, David Banmiller, says has been profitable. Over the weekend, both bidders dropped out and Aloha informed the Bankruptcy Court that its financing was cut off, forcing it to suspend operations. Aloha converted its petition from Chapter 11 (reorganization to continue) to Chapter 7 (liquidation).[46] The airline also carries packages for FedEx, UPS and DHL. The unexpected decision by Aloha to ground its cargo planes came during a hearing in federal bankruptcy court in Honolulu on the question of whether Aloha's pilots could strike the cargo operation.[26]
April 22, 2008: The Air Line Pilots Association files for a temporary restraining order and a preliminary injunction in U.S. Bankruptcy Court in Honolulu seeking to prohibit the company from assigning lower-seniority pilots to fly Aloha's interisland cargo routes.[30]
Walters wasn't the only one scrambling yesterday after word began filtering around Honolulu that Aloha, the state's biggest air cargo carrier, was shutting down immediately after unsuccessful attempts to sell the freight business in bankruptcy proceedings. Shippers yesterday bemoaned being blindsided by the unexpected shuttering as they worked to put contingency plans in place.[12] HONOLULU (KHNL) -- Aloha handled a majority of the state's air cargo, and although other carriers are providing a short-term solution, a long-term solution must ultimately come into play.[45]
Aloha's work force was the 10th largest in the state at 3,500 before it ceased passenger operations on March 31. Aloha, which canceled flights from four cargo freighters last night, had flown 85 percent of the state's air cargo, including time-sensitive goods such as fresh bread, milk, produce and fruit.[2] Aloha handled more than 85 percent of the state's interisland air cargo business.[47] Local companies have been scrambling to find alternative air freight options since Aloha Cargo accounted for 85 percent of the state's interisland business.[48]
Starting a new interisland air cargo company will be difficult given the high price of jet fuel and razor-thin profits in the cargo business, analysts say. Aloha abruptly closed its cargo unit on Monday, laying off 300 workers and cutting a vital transportation link for hundreds of businesses.[20] A: Aloha had 85 percent of the interisland air cargo market, so it won't be easy for customers to find alternative air cargo services.[32] Aloha carried 85 percent of interisland air cargo before it stopped service on Monday.[49]
The purchase of the service that carried 85 percent of Hawaii's interisland air cargo needs to be approved by U.S. Bankruptcy Court, which was considering the arrangement Thursday.[11]
Pacific Air Cargo paid about $2.2 million to buy the contract services and is set to take over operations on Monday or sooner, if a bankruptcy trustee approves an earlier transfer.[6] Pacific Air Cargo is rescuing more than just contract services. They've been a godsend for companies trying to get precious cargo to the neighbor islands.[7] Pacific Air Cargo also plans to pay the contract services employees who have been working since the case was converted to Chapter 7 on Monday, the source said.[3]
The agreement was in question Monday, when the bankrupt carrier converted to Chapter 7 Liquidation. Some of those questions were answered. Aloha Airline officials left bankruptcy court Thursday pleased because the future of its contract services division and its 11-hundred employees were in good hands. "Can you imagine the employees kind of being sensitive about what the position is and they're glad to see this happen and so are we," said David Banmiller, Aloha Airline C.E.O.[50] The contract to purchase Aloha's cargo division could be approved as early as Thursday morning in U.S. Bankruptcy court in Honolulu, after which service could begin again.[47]
HONOLULU -- Saltchuk Resources and Aloha Airlines' officials went into court on Thursday with an agreement to take over the cargo division, but the bankruptcy judge wanted answers on the details of running the business.[35] HONOLULU -- The company that operates interisland shipper Young Brothers announced on Thursday that it has reached an agreement to buy Aloha Airlines' cargo division.[51]
Aloha Airlines customer service agents Hoku Pepee, left, and Jeff Alu work at the counter of Aloha's cargo division at the Honolulu International Airport.[23]
WAILUKU ''' Maui flower, fruit and vegetable growers scrambled Tuesday to find new ways to send their perishable goods off the island after Aloha Airlines abruptly shut down its cargo division Monday. Two farmers ''' one who grows hydroponic greens and another who grows flowers ''' found options they both said they were excited to see spring into action.[41] Teena Rasmussen of Paradise Flower Farms said she'''ll be using Commodity Forwarders Inc., a refrigerated truck service, which provides transportation of perishable items from Maui to Oahu and back via the Hawaii Superferry. Commodity Forwarders, which has offices throughout the islands and in California and Alaska, already had three successful runs between Maui and Oahu since it started its perishable transportation service on the Superferry on April 18, according to Ruth Fuentes, the Maui station supervisor for CFI. Before this week'''s sudden demand, Commodity Forwarders Inc. had helped farmers and candy manufacturers move their goods once a week between Maui and Oahu via the Superferry. After Aloha shut down its cargo division Monday night with its financing cut off, Commodity Forwarders moved to provide its refrigerated truck service on a daily basis. '''This was a great opportunity for us to broaden our program,''' Fuentes said. '''This whole Aloha thing has got everyone in a frenzy and we want to help.'''[41]
The cargo deal was complicated by a dispute between GMAC and Aloha's pilots, who threatened to strike over an issue related to whether pilots left jobless when Aloha's passenger service shut down March 31 would have the option to work for the cargo division. Now that the bankruptcy case has been converted to Chapter 7, the collective bargaining agreement with its pilots essentially has ended.[52] Before the cargo operation was shut down, the Air Line Pilots Association had voted overwhelmingly to authorize a strike of Aloha cargo operations in a dispute over which pilots would fly the planes. The union wants the airline to use seniority to determine which pilots to use for the cargo flights, and to include those who had been piloting passenger flights.[11] Two companies that were interested in buying Aloha Cargo and then dropped out of the bidding Monday held negotiations on Tuesday night and Wednesday with Aloha. They were interested once again in buying the cargo operation now that its 300 to 400 employees no longer have union contracts since the company shut down.[51] The agreement called for operations to resume by midnight Thursday, with Aloha's cargo employees to be hired to return to run the operation. Last week, Saltchuk pulled out of an auction for the cargo service after its $13 million offer was outbid by another company.[11]
Promises that may no longer be valid since aloha air cargo ceased operations. The bottom line here is that most employees and the people of hawaii say they need for the sale to go through.[28] Aloha Air cargo planes sat on the tarmac at Honolulu Airport yesterday afternoon after the abrupt shutdown of operations when two bidders for the profitable unit pulled out.[2]
Love's Bakery, thrown into a tailspin by the sudden shutdown of Aloha Airlines' cargo unit, is going the distance to make sure its customers on the Big Island and Kaua'i get their baked goods.[12] Aloha Airlines abruptly shut down its cargo unit on Monday, leaving many businesses scrambling to find alternative ways to ship their goods to the other islands.[20] Neighbor Island businesses are scrambling to find alternatives to shipping goods now that Aloha Airlines Cargo has shut down.[15] Newspaper deliverer Dennis Nakano was one neighbor island vendor lamenting delays yesterday due to Aloha Airlines' cargo shutdown. He waited until 7 a.m. for mainland newspapers bound for hotels, four hours later than usual.[53]
Nearly 400 employees are affected by the shutdown. It's not clear whether other interisland airlines have the capacity to carry the thousands of tons of mail, newspapers, food, pharmaceuticals and perishable farm products Aloha Airlines Cargo moves between the Islands each day.[26] Aloha Airlines' move to shut down its interisland cargo operations will put 300 employees out of work.[23]
The legal action was filed as a result of a disagreement between management and the pilots over whether former passenger service pilots should be given the option to fly cargo planes. April 7, 2008: Aloha Airlines cancels seven of its 16 interisland round-trip cargo flights due to pilots' absence.[30] Saltchuk said it has the consent of GMAC Commercial Finance to purchase Aloha Airlines Cargo's assets, equipment and service lines.[24] KAHULUI ''' Neither rain, sleet, snow, gloom of night nor the sudden shutdown of Aloha Airlines cargo service will keep the mail from getting through to Maui.[46] Wagner said while Hawaiian Airlines has been moving double the volume of cargo since the Aloha shutdown, it continues to focus on passenger service. "We're really focusing on making sure the passenger needs are met," he said.[13] A spokeswoman for Island Air said that airline is reviewing the situation. A message to Mesa Air Group about its go! subsidiary was not answered. Hawaiian Airlines said it will seek to assist shippers, but it focused on expanding its passenger operations to meet the need created by Aloha'''s shutdown of its passenger services.[46]
After learning that Aloha wouldn't be flying cargo last night and not having other options for interisland cargo flights, Love's made arrangements with Surefire Consulting to ship the baked goods on flights to Los Angeles where they could be loaded back on to other commercial passenger planes headed directly to Neighbor Island airports. "They (Aloha) just left us high and dry," said Mike Walters, president of Love's Bakery, the biggest customer of the cargo operation. "This came as a complete surprise to us because we were assured for the last month that they had a contingency plan."[12] The shutdown means the loss of 300 jobs and the end of a business that handled more than 100 million pounds of cargo each year ' about 85 percent of all goods flown between O'ahu and the Neighbor Islands. The impact will be felt by retailers and wholesalers of time-sensitive consumer items such as baked goods, produce, meat, medical supplies, newspapers, auto parts and construction materials. The move also will affect movement of interisland mail and the flow of cash between local banks and their Neighbor Island branches. "This is a critical link in the state economy," said Leroy Laney, professor of economics and finance at Hawai'i Pacific University.[33] House Speaker Calvin Say (D, St. Louis Heights-Palolo Valley-Wilhelmina Rise) also said legislative leaders would work with neighbor island lawmakers on how best to help residents. He called the cargo shutdown "a wake-up call for all of us on the importance of our transportation infrastructure." Singerman said Aloha was forced to liquidate its assets after Seattle-based Saltchuk Resources Inc., parent of interisland shipper Young Bros.[2] Loke said small farmers will have a hard time catching up in the wake of the Aloha shutdown. Some Neighbor Island farmers say they're looking at scaling back because of the loss of the cargo carrier. "We only hope that something happens and they revive the cargo," said Eric Tanouye, president of the Hawai'i Florists and Shippers Association.[54] While there was much focus on Honolulu shippers getting cargo to Neighbor Island customers, there also were questions about how Hawai'i's cut flower and ornamental plants business would fare with shipments into O'ahu. Neighbor Island growers of fruits and vegetables availed themselves of Aloha's overnight flights to get their produce to Honolulu.[12]
Farmers in Hawaii are among those who have been affected by the sudden closure of Aloha Air's cargo operation. Aloha closed its profitable air freight business this week, after its lender GMAC Commercial Finance cut off financing.[42] WAILUKU Freight was backed up at least several hours and Hawaii's flower industry seemed to be wilting under the fallout from the closing of Aloha Air's cargo services. "It has greatly handicapped my business right now," said Heather Calvert, owner of Maui Wholesale Flower Exchange. "It's very scary.[53] '''It'''s a disruption of our service, but we can maneuver our business. They'''ve got to go look for a job.''' Gilbert Silva, general sales manager for Maui Farmers Cooperative Exchange on Lower Main Street in Wailuku, said he felt bad over the plight of farmers who relied on Aloha cargo to ship their perishable goods.[41]
State labor and human services teams were gearing up to assist the new batch of Aloha workers left without jobs, but a state legislator said there is little the state can do to provide immediate help to businesses in need of a cargo carrier. '''We can talk to Hawaiian and United and maybe the Superferry to ask that they make more calls,''' said Rep. Joe Souki, chairman of the House Transportation Committee.[46] Innovation, as it applies to the State'''s transportation sector, means more efficient use of the $5 billion of oil we import every year. Improving this efficiency and thereby reducing costs is a key part the Hawai'''i Clean Energy Initiative. Innovation also means adopting alternative and advanced transportation technologies, such as inter-island ferries. The Administration is also investing in critical public infrastructure such as airports, harbors and highways. These long-term structural fixes will have more impact than any short-term talk. These efforts are continuing to take place effectively, often behind the scenes. They don'''t require a news conference or a task force as some would as some in the media have suggested. They require the type of focused attention, leadership and action that Governor Lingle and her Administration continue to demonstrate. The business decision by Aloha'''s mainland creditors to end its cargo operations is unfortunate and will affect some residents and business in the short-term. This proactive approach by our Administration and the resiliency of the private sector to adapt and seize opportunities will ensure the long-term economic future our state.[21] HONOLULU, HAWAII - It is not surprising that news media and other pundits are turning to government to intervene in the wake of Aloha Airlines decision to cease its cargo operations.[21] A deal to sell the inter-island cargo operations of bankrupt carrier Aloha Airlines could be announced as early as today, the Honolulu Star-Bulletin reports.[1] In an abrupt, chaotic ending to Aloha Airlines' nearly 62-year history, the bankrupt carrier pulled the plug on its cargo operations yesterday after two bidders for the profitable unit dropped out and Aloha's lender refused to provide additional funding.[2]
April 23, 2008: Aloha Airlines pilots vote to authorize a strike of the carrier's cargo operations.[30]
Hawaii's Aloha Airlines closed its cargo operations Monday after its primary lender decided not to provide further financing.[55] Speaking at a luncheon of the Hawaii Publishers Association today, Aloha Airlines Chief Executive Officer David Banmiller said discussions are under way to turn over the company's cargo unit to a new owner.[31] During a speech at a Hawai'i Publishers Association meeting yesterday, Aloha's chief executive David Banmiller said discussions are under way to turn over the company's cargo unit to a new owner. He declined to identify the buyers but said he expected the deal to be announced shortly.[16]
Aloha told cargo employees to show up for work yesterday, several people familiar with the situation said. Aloha also has contacted state officials to reissue airport security badges and is in the process of reinstating its contracts with Federal Express and other mail services, one person familiar with the deal said.[16] The deal essentially preserves the jobs of hundreds of employee who handle ticketing, baggage services and other ground services for several carriers in Hawaii. "I want these jobs to stay in Hawaii, I don't want these airlines to bring people from the mainland," said Ward. "I think it's a good thing for the state, the community, the employees, for the other airlines to know they have a continuation of services," said Banmiller. It's still unclear how many Aloha employees will be retained.[50]
State lawmakers are now bracing for the impact of the pullout of Norwegian Cruise Lines' two ships, which could rival the 2,200 total jobs lost at Aloha. "This is one more indicator that our economy is suffering," said state House Speaker Calvin Say. "It is also a wake-up call for all of us on the importance of our transportation infrastructure." The Aloha cargo closure took employees, customers and creditors by surprise, especially because Aloha had at least two bids for its profitable cargo unit.[33] All of Aloha's collective bargaining agreements with mechanics, pilots and ground personnel ended when the company closed. That means Aloha Cargo could be much cheaper to operate with lower pay and benefits for nonunion employees.[51]
Bankruptcy Judge Lloyd King ordered that an interim trustee be appointed. The sudden ending resulted in the termination of 400 cargo pilots and mechanics, leaving the company with only about 950 employees in its aviation contract services unit.[2] "The customers love the people. They said right off the bat, they're doing a great job for us, we want to keep these people that are working on our account, and that's our goal, to keep these people working these accounts," Ward said. Ward said that the roughly 1000 employees in contract services will keep their jobs and some may actually get raises, because Ward said most of her company's nonunion pay scales are higher than what Aloha paid.[6] There is late word that Aloha's primary lender, GMAC, is refusing to pay salary and benefits for contract services employees. If so, Ward said she will cover their pay until a deal can be reached. This material may not be published, broadcast, rewritten or redistributed.[6]
Aloha's main lender, GMAC, said it will continue to finance the contract services division through Monday when a new company will take over.[9] A: The only division of Aloha still operating is the contract services division, which handles baggage duties, ramp duties and other ground services for carriers that serve Hawai'i. It employs about 1,100 workers.[32]
Aloha, the state's second-largest carrier, filed for bankruptcy protection on March 20 after losing more than $120 million during the past two years. The company shut down its passenger service 11 days later and terminated 1,900 workers in the largest mass layoffs the state has ever seen.[16] GMAC is owed $44 million by Aloha and had been providing financing to keep the cargo operations flying after it filed for bankruptcy protection on March 20. U.S. Bankruptcy Judge Lloyd King reluctantly converted Aloha's bankruptcy reorganization into a bankruptcy liquidation, saying he could not order GMAC to continue to finance Aloha's cargo operations. As of tonight, Aloha's will stop cease flying its two cargo aircraft and will begin the process of selling its assets to the highest bidders.[23] GMAC took the lead in the sale talks because it is owed $44 million by Aloha and has provided money to keep the cargo operations flying after it filed for bankruptcy protection on March 20.[33]
During a bankruptcy court hearing, one of the bidders, Jupiter Holdings Group, said it bid $13.65 million for the cargo operation, but that GMAC and Aloha increased the asking price to $15 million.[23] Last week, the pilots' union threatened to strike over the issue. Attorneys for the pilots union and Aloha's unsecured creditors said in bankruptcy court that Aloha will get less than $13 million by shutting down the cargo operations and selling its equipment.[33]
The shutdown of Aloha's cargo operation means it likely will be sold in the same fashion as the rest of Aloha, via a Chapter 7 liquidation process in bankruptcy court, or through a liquidation process outside the court. It's unclear what the shutdown cargo operation ' or what's left of it now that former employees and customers are moving on ' could fetch.[52] The two negotiating companies pulled out Monday when Aloha's lenders increased the price and insisted on cash. Cargo employees went to work without pay to help customers reclaim their undelivered cargo. State airport officials have been contacted about how quickly they can reissue airport security passes to the 300 to 400 cargo employees who were terminated Monday with the shutdown, sources said.[51]
At the Kahului Airport cargo terminal Tuesday morning, activity was routine and the Aloha warehouse was still open, but only to allow customers to pick up goods already shipped. Supervisor Glenn Yayoshi, a 32-year Aloha employee, said he was '''a little bit surprised''' by the sudden closure of Aloha'''s profitable cargo division ''' but only a little.[46]
Aloha was the gateway for 85% of Hawaii's air cargo, and now that the division is closed, many are calling on the state to step in.[45] The ground-services business was sold last week to Pacific Air Cargo but continued disputes over the status of the 300 Aloha pilots made the sale of the cargo business more problematic.[26] Pacific Air Cargo's new Boeing 727 was scheduled to arrive last night from the mainland. Kathy Lyons, secretary of the Air Cargo Association of Hawaii, said that once Pacific Air Cargo completes its move to expand interisland freight service, the demand for air cargo deliveries should lessen significantly.[13] The sky isn'''t falling.''' Kahlstorf said he was surprised to find out how many island businesses have regular interisland freight, some with so much shipping it would make sense for them to, in effect, buy their own individual air cargo service. Pacific Wings, which handles small shipments on its passenger flights, has always offered what were in effect charter cargo trips.[46]
Lyons, whose association represents some air carriers, freight forwarders, truckers and major shippers, said the Pacific Air Cargo service might not satisfy all the needs immediately, but would move air freight service in the right direction statewide.[13] All first-class mail goes by air, but some parcel post goes by barge. Gonzalves said Aloha'''s contract would have ended in June anyway and that the Postal Service will review its options, but in the near term it did not expect any disruption in the mail. Kahlstorf was enjoying a huge disruption in his business as his staff scrambled to accommodate suddenly bereft shippers. Like Aloha with its Boeing 737s, Pacific Wings''' Caravans can have the seats taken out to become freighters.[46]
Many of the shippers that use Aloha cargo service have made contingency plans with other air or sea carriers."[17] The 15 farmers in the Cooperative Exchange are not affected by the Aloha cargo shutdown, Silva said. They ship out their produce through Young Brothers. and have started to use the Superferry once a week. '''I feel bad totally for the farmers that depend on the air cargo,''' he said.[41] On Tuesday morning, as a half dozen delivery trucks lined up to collect air freight delivered overnight to Kahului Airport, Perry Dill was waiting to pick up several large boxes of frozen scallops that had been flown in from the East Coast by American Airlines. Dill, whose Oysters and Seafood Specialties in Lahaina receives a weekly scallop shipment, said Aloha usually helped him retrieve his shellfish because its office opened earlier than American'''s cargo office. He said he didn'''t know how the Aloha shutdown would affect him.[46]
Seattle-based Saltchuk Resources, parent company of Young Brothers and Hawaiian Tug & Barge, said Thursday it has arranged to buy Aloha Airlines Cargo.[24] HONOLULU (AP) — Aloha Airlines shut down its cargo division Monday because its primary lender decided not to provide further financing.[5] Honolulu (KHNL) -- Aloha Airlines announced the end of its cargo division Monday.[18]
Aloha Airlines CEO David Banmiller mentioned a possible buyer for the cargo division in a speech to the Hawaii Publishers Association on Wednesday, but gave no specifics at that time.[47] A key factor contributing to the collapse of Aloha Airline's cargo division was the inability of Aloha's lender and the two bidders for the unit to come to terms on what the purchase would entail, an Aloha attorney said yesterday.[52] Aloha Airlines cargo division, shut down abruptly two days ago, is expected to be saved.[47] The owner of Young Brothers/Hawaiian Tug & Barge has revived its efforts to acquire Aloha Airlines' cargo division.[16]
Aloha Airlines said today it is shutting down its interisland cargo operations.[23]
Caravans are much smaller than a 737, but still are capable of carrying a couple of tons of cargo. Aloha had 85 percent of the interisland cargo business, a sector it had dominated by putting quick-change kits on four of its passenger planes. That allowed it to move freight around the islands at night. Kahlstorf said he was looking forward to quickly coming to some stable arrangements with large shippers, once the immediate scramble smoothed out. He said the shock will be absorbed.[46] Aloha flew more than 100 million pounds of cargo each year, or about 85 percent of goods flown between O'ahu and the Neighbor Islands.[20] For O'ahu shoppers, the Aloha cargo closure is expected to make it harder to find produce grown on the Neighbor Islands.[54] Loosing Aloha Cargo means finding another method to send cargo to the neighbor islands.[38]
In 2006, 47,000 tons of non-mail air cargo was transported from Honolulu to the Neighbor Islands and 22,000 tons from the Neighbor Islands to Honolulu, according to the latest state statistics.[12] "I will be working with our Neighbor Island lawmakers to determine how we can help the residents and businesses," Say said. "This is one more indicator that our economy is suffering, and that we need to be extremely cautious with spending going forward. It is also a wake-up call for all of us on the importance of our transportation infrastructure." Eight C-17 cargo aircraft based at Hickam Air Force Base jointly maintained and operated by the Hawai'i Air National Guard and active-duty Air Force are used for worldwide missions, including humanitarian relief efforts, but they may not be an option. Lt. Col. Chuck Anthony, a Hawai'i National Guard spokesman, said he was not aware of any consideration being given to using C-17s for critical cargo deliveries. "If there is a bona fide emergency, we can transport those things," Anthony said.[17]
The company was able to get shipments to the Big Island and Kaua'i on other carriers. Eric Enomoto, president of HPC Foods Ltd., said the wholesaler is "exploring all options" to get its wide range of products ' from fresh-cut vegetables to poi ' out to the Neighbor Islands today. He said the company is expecting some losses in the short-term, but it isn't yet clear just how big they will be. At Paradise Flower Farms on Maui, which sells flowers for lei and florists, owner Teena Rasmussen said she sent a shipment to O'ahu by FedEx yesterday ' much more costly than her usual Aloha shipments, but something she was forced to do if she wanted to keep her customers happy. "It's a nightmare," she said. Staff writer Rick Daysog contributed to this report.[54] The three-engined jet aircraft is able to carry up to 80,000 pounds, more than double the capacity of Aloha's cargo planes, which hauled up to 30,000 pounds each. The company is expected to begin running the cargo plane this evening between Honolulu and Kona and Hilo on the Big Island; Kahului on Maui; and Lihue on Kauai.[19] Aloha also carried the bulk of mail sent between the Big Island, Maui and Honolulu. Another smaller carrier also delivers mail, including to Kaua'i. Late yesterday the U.S. Postal Service said it was hoping to put its emergency plans into place seamlessly so that customers would not notice a service disruption.[12]
Despite conventional wisdom that Aloha's cargo service was profitable, Laird said it had been losing money over the last six months because of the surge in jet fuel prices, currently at $3.65 a gallon. "It's very difficult, if not impossible, to make money flying heavy jet transports in Hawaii," said Laird, a part-time Maui resident whose firm publishes the monthly trade newsletter Cargo Facts.[19] A spokeswoman for Saltchuck Resources, which had signed a letter of intent to purchase Aloha's cargo division for $13 million, yesterday said the company had no comment. Saltchuck, the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge, pulled its bid last week after Aloha and GMAC changed the terms of the bidding.[52] Last week, locally based Jupiter Holdings Group bid $13.65 million for the division. James Wagner, Jupiter's attorney, said the company was prepared to go through with its purchase as recently as yesterday afternoon. GMAC unexpectedly upped the price to $15 million and required a higher deposit, he said. Saltchuk, meanwhile, pulled its bid last week after Aloha and GMAC changed the terms of the bidding. "This all has to do with other parties changing the deal without any warning," Wagner said. "I've been in practice over 30 years and I've never seen a case end like this."[33] Saltchuk, which initially bid $13 million, walked out of the cargo bidding auction on April 21 when GMAC informed Saltchuk that the minimum starting bid was $20 million. Saltchuk issued a press release Thursday that said it had terminated its participation, but Aloha continued to pursue a deal.[2]
An attorney for one of the bidders, Jupiter Holdings Group, said the sale fell through because the lender, GMAC Commercial Finance, insisted on eleventh-hour changes, including a higher price, that ultimately torpedoed any deal. "It wasn't that the buyers pulled out," said James Wagner, who represents Jupiter. The lender "demanded changes at the last minute, and the changes were unacceptable to both buyers." The deal's demise Monday prompted Aloha to abruptly shut down its cargo operation after GMAC cut off financing.[52] A Chapter 7 trustee will preside over the sale of the assets, Aloha said in a news release. The carrier took the action after both bidders for Aloha's cargo operation pulled out of the sales process and, as a result, GMAC Commercial Finance said it would no longer provide the cash needed to continue Aloha's day-to-day operations.[56] Aloha's primary lender, GMAC Commercial Finance, told a U.S. Bankruptcy Court judge that it will no longer fund Aloha's day-to-day operations. In a statement, Aloha says, "This action became necessary today after both bidders for the cargo operation pulled out of the sales process."[18] The deal is subject to the approval of the court-appointed trustee or the U.S. Bankruptcy Court, where the parties are due for a hearing to start at 9:30 a.m. today. The company said its agreement with GMAC requires that cargo operations resume by midnight tonight.[37]
Aloha's cargo office was closed and locked at mid-afternoon, even as lawyers and company executives were negotiating a deal to restart cargo operations.[51]
With just a day's notice the company leased a 727 and will begin interisland cargo service to fill the void left by Aloha cargo's sudden closure.[6] By taking over Aloha Cargo and owning Young Brothers Ltd., Saltchuk could control a majority of Hawaii's interisland shipping.[51] Saltchuk has formed a new subsidiary, Aeko Kula, to handle the business. It intends to hire from the existing Aloha cargo work force.[24] Saltchuk's announcement said the rehired Aloha cargo employees would work for the newly formed Saltchuk subsidiary Aeko Kula Inc.[11]
Aloha, which has closed and filed for bankruptcy liquidation, and the Seattle-based Saltchuk Resources Inc. are expected to announce an agreement to restart the cargo service.[36] Aloha filed for bankruptcy protection on March 20 because it was losing money. Aloha shut its passenger service on March 31, and said it would sell the cargo service.[32] March 20, 2008: Aloha files for Chapter 11 bankruptcy protection for the second time in just over three years. March 30, 2008: Aloha Airlines shuts down its passenger service, firing 1,900 workers.[30]
Aloha pilots laid off with the closure of the passenger service wanted the option to work for the cargo division.[33] The cargo service continues operating. April 1, 2008: Aloha requests an injunction against the Air Line Pilots Association, alleging it is attempting to "disrupt or stop its cargo operations."[30]
Aloha Air, which earlier shut down passenger operations, abruptly shuttered its cargo flights early this week.[1] Aloha used six Boeing 737-200 planes solely for interisland cargo. Hawaiian and other carriers take cargo in their passenger planes and don't have aircraft dedicated to cargo.[33] "Like many others in the community, Hawaii Superferry will do what it can to step up to help ensure that interisland commerce continues with as little disruption as possible for Hawai'i's businesses and residents," Hawaii Superferry said in a written statement. Keoni Wagner, Hawaiian Airlines vice president of public affairs, estimated his company's current interisland cargo business at 8 percent to 10 percent but had no comment on whether it plans to expand.[17] "There is a possibility of some service impact to customers," said Duke Gonzales, a Honolulu-based spokesman for USPS. "We are going to do everything we can to minimize the impact and make it as short term as possible." Hawaiian Airlines, which flies 8 to 10 percent of the interisland cargo, said last night it was prepared to increase cargo capacity as much as possible but was limited by its fleet.[2] To survive at current fuel prices, an operator would have to charge at least $1 a pound or more, about double current prices, according to Laird. Hawaiian Airlines, which has ramped up its cargo services aboard its existing passenger flights, said that without cargo-dedicated aircraft it will be able to accommodate only a small percentage of the market.[19] Rasmussen said she'''s willing to give it a try, and especially likes the service price of 15 cents a pound, versus paying 50 cents a pound, which is what Hawaiian Airlines charges. '''Actually this could be a good deal,''' Rasmussen said. She still has to use Hawaiian for shipments to the Big Island and Kauai. The Superferry stopped its service to Kauai in the face of strong public protests, and it is not scheduled to start its service to Kawaihae on the Big Island until 2009. Rasmussen said her only concern about using Commodity Forwarders is the reliability of the Superferry, which canceled runs last winter because of heavy ocean swells.[41]
Alpine Air is one of the local airlines trying to pick up Aloha's void. It will run four additional flights to get goods to neighbor islands.[39] "Since Aloha first announced it was filing for bankruptcy, the state has been in discussions with cargo operators to identify other alternatives for the transportation of goods between the islands.[17] For now all the islands remain dependent on each other to get through any hardships that might arise out of the Aloha cargo shutdown.[57] The news of Aloha Cargo's shutdown sent shippers scrambling to make alternative arrangements after being caught off guard.[14] Chong used Aloha Cargo and was not a known shipper with Hawaiian. Now in order to get on that list, which is required since the September 11 attacks, she was told it will take 30 days. Chong will ship with FedEx or Young Brothers in the meantime and expects her shipping costs to go up 15 to 20 percent. "If it's something that's an emergency we may have to tell our customers that we're not going to be able to get it to them because very often it's a next day type of delivery they expect us to do," said Chong.[39] Aloha Cargo customers were shocked to hear the news. Many are scrambling to find an alternative on such short notice.[38]
"The shutdown will definitely impact the local economy, and with medical supplies, it could lead to life or death situations." Gov. Linda Lingle said in a news release that she has had discussions with other cargo operators to find shipping alternatives since Aloha filed for bankruptcy.[33] Aloha's cargo shutdown "is a dramatic shock to our economy," said Matthew Loke, state agricultural development division administrator.[54]
The company had originally bid $13 million for Aloha's cargo division.[47] Aloha's chief lender, GMAC Commercial Finance LLC, was hoping to get at least $15 million for the cargo unit.[32] Aloha said it lost $120 million in two years because of soaring fuel prices and a costly interisland fare war. Aloha flew its final two afternoon cargo flights.[33]
GMAC's $15 million price was not credible, and when combined with "unreasonable pilots," the buyers walked, said Ned Laird, managing director of Seattle-based Air Cargo Management Group and publisher of a trade newsletter Cargofacts.com.[52] Pacific Air Cargo agreed to pay two-point-05 million dollars for the business.[50] At Pacific Air Cargo off Lagoon Drive, truckload after truckload of cargo arrived at mid-afternoon bound for Kauai, Maui and the Big Island.[6] Pacific Air Cargo, a one-plane carrier that flies a Boeing 747 between Los Angeles and Honolulu, reportedly was eyeing the interisland market, but a request for comment was not answered.[46] "We're prepared to fly it interisland and do as much as we can to alleviate the problem, so at least get some relief," Pacific Air Cargo President and owner Beti Ward said.[6]
"The customers are going to be taken care of,''' said Beti Ward, CEO of Pacific Air Cargo.[7] A prospective bankruptcy trustee has been identified. As of Tuesday afternoon, Pacific Air Cargo was awaiting word from him on how things will proceed.[7]
Many people across the state are left wondering what'''s next, after 85 % of Hawaii's air cargo service has evaporated.[57] For other shippers and for other carriers that might serve them, it'''s a scramble. Speaking via cell phone from New Mexico, Pacific Wings President Greg Kahlstorf said he talked to more executives of big businesses in Hawaii in three hours on Tuesday than he had in the past 10 years. He sees an opening for a new kind of custom interisland cargo service, and he'''s prepared to bring in several cargo versions of the Cessna Caravan if it works out.[46] Pacific Air last week agreed to pay $2.05 million for the unit, which handles ticketing, baggage services, ramp duties and other ground services for carriers that serve Hawai'i.[33]
Pacific Air also is looking to lease a second freighter to meet the anticipated demand for cargo services, according to a company representative.[19] Founded in 1982, Saltchuk Resources is a Northwest-based holding company that began in marine transportation but has expanded to include air cargo, petroleum distribution and real estate investing lines of business.[34] Businesses are going to hurt unless we all pitch in and help each other," said Kevin Molale of Pacific Air Cargo.[45] Pacific Air Cargo already flies a leased 747 to Los Angeles daily. It also flies cargo to Guam and American Samoa once a week.[6]
Since the fuel between HSF and air cargo is pretty much a wash, prices (after this loss-leader Superferry discount is over) will be about the same.[41] We will make every adjustment possible to increase our cargo carrying capacity, but won'''t be able to fill the void with air cargo as we did with passengers.'''[46] The transit time and convenience of departure times will push people to air cargo, I think.[41]

Alpine's planes can carry anywhere between 3,500 to 6,000 pounds, where the Aloha Cargo planes could carry four to six times that amount. "It's a big service there, a lot of pounds were being moved that are going to have to be moved another way, and I think people will see higher rates, they'll have to because of the cost of fuel. It's not going to go away, it's not going to go down much. [39] HONOLULU -- Major developments were made overnight regarding the Aloha Cargo shutdown.[48] Alohas cargo operations will cease tomorrow, but the timing of the shutdown was unclear today.[22] The lender previously threatened to pull the financing for the cargo operations after a dispute with Aloha's pilots.[33] Jupiter, which continues to stand by the offer, said it was surprised by Aloha's decision to shut down the cargo operations.[23] An interim trustee of the bankrupt airline is scheduled to be appointed on Tuesday. Aloha's cargo unit grounded flights on Monday afternoon after two potential buyers canceled their offers and Aloha's lender also pulled out.[9] The U.S. bankruptcy court will appoint a trustee to oversee the liquidation of Aloha's cargo unit.[55] "Because it was a grim possibility, it takes us all by surprise," U.S. Bankruptcy Court Judge Lloyd King said. Aloha filed for bankruptcy last month and then shut down its unprofitable passenger service March 31 after it was unable to find a buyer.[5] Aloha Airlines today advised the U.S. Bankruptcy Court that it would convert its Chapter 11 reorganization case to a Chapter 7 liquidation case in order to provide for the orderly liquidation of the company.[56] The parent company of Young Brothers said today it has gotten lender approval to buy the air-cargo operations of Aloha Airlines, which have been shut down since Monday.[37]
'''Some of our other growers have already moved to Hawaiian Air and even prior to the problems with Aloha Airlines the bulk of our inter-island freight was coming into us on Hawaiian Air,''' Watanabe Floral Brian Fujita said.[38]
November 2002: Aloha wins approval for a $45 million loan guarantee from the federal Air Transportation Stabilization Board. November 2002: Aloha reaches agreement with four of its unions on pay cuts and contract extensions covering 3,000 workers. April 2003: Aloha reports a net loss of $43 million in 2002, surpassing its $11.1 million loss the previous year.[30] Boyer could not be reached for comment Tuesday. In Memphis, a spokesman for FedEx, which had service contracts with Aloha, said he could not comment in detail, but that FedEx has contingency plans and does not expect problems with its business in Hawaii.[46] While the cargo team stays hard at work, Ward reassures the contract service employees to do the same ''' that despite the lag between Chapter 7 conversion and her purchase, paychecks will come.[7] GMAC has asked Field, the trustee, to release $100,000 in payroll at First Hawaiian Bank that has been earmarked to pay the contract services employees.[3]
The company also had the major U.S. mail contracts for Maui and the Big Island, but the U.S. Postal Service said yesterday it had been working on a contingency plan for the past several weeks and has lined up Corporate Air to deliver mail to the two islands.[2] At the state headquarters of the Postal Service in Honolulu, spokesman Duke Gonzalves said that Corporate Air, which already was carrying mail between Honolulu and Kauai, Molokai and Lanai, has agreed to take over the links between Oahu and Kahului, Hilo and Kona. He said Aloha had carried mail three times a day between Honolulu and Kahului, although the Postal Service does not reveal amounts.[46] The governor could have brought together businesses that depended on Aloha to send goods, air and sea shipping companies, county mayors, legislators and other stakeholders to devise a plan to keep products moving. She also could have acted as a mediator or emphasized to parties in the bankruptcy the importance of continuing service, lending the weight of her office to the proceedings.[27]
House Speaker Calvin Say's remark that the loss of cargo service was "a wake-up call for all of us on the importance of our transportation infrastructure" sounded particularly feeble, as if the alarm bell had not been rung before. The governor, who commands the bully pulpit, doesn't seem to have used her authority with much determination. In a statement issued after the airline was forced by its creditors to end cargo service, Lingle vaguely described her administration's activity as simply "discussions with cargo operators" and identifying "alternatives" for transporting goods.[27] "Hawaiian will continue to do all it can to help interisland cargo shippers with our expanded operations," the airline said in a written statement last night.[17] '''Hawaiian will continue to do all it can to help interisland cargo shippers with our expanded operations,''' said Keoni Wagner, Hawaiian vice president for public affairs.[46]
The action left 85 percent of the interisland cargo business in limbo, with shippers looking for alternatives. Most big shippers had already been scoping out other ways of getting their goods between islands.[9] Shippers and state officials are looking for alternatives for interisland cargo after the shutdown.[49] In 2000, Saltchuk acquired Young Brothers/Hawaiian Tug & Barge, the state's largest interisland cargo service.[11]
April 23, 2008: Saltchuk Resources Inc., the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge, drops out of negotiations for the cargo division after the airline unexpectedly raises the price to $20 million.[30] On March 27, the Seattle-based owner of Young Brothers/Hawaiian Tug & Barge, Saltchuk Resources Inc., signed a letter of intent to purchase the cargo division for $13 million.[33]
Wagner said Jupiter, which bid $13.65 million for the cargo unit, was only told about the new demands on Monday, and GMAC gave no explanation on why it was seeking the last-minute changes, including a minimum price of $15 million. "I suspect they wanted more money because they wanted more money," Wagner said.[52]
Aloha's lender GMAC was not pleased with the union's actions, and the actions may have made the cargo division less attractive to a potential buyer.[32] The union had threatened to strike because Aloha was not allowing senior pilots who cost more to fly the cargo planes.[35]
Paul Brewbaker, chief economist at the Bank of Hawaii, said it may be some time before competing carriers and cargo operators fill the void left by Aloha. "This is huge," said Brewbaker.[33] The governor is expected to veto the emergency powers bill on Thursday. As for the cargo crisis, she says there are enough carriers to handle Aloha's abandoned load. Among those carriers offering help is Young Brothers.[45]
Oct. 13, 2006: Aloha sues Mesa Air Group, alleging the Phoenix-based parent of the new interisland carrier go! misused confidential information in an attempt to drive Aloha out of business.[30] The layoffs are more bad news for an economy shaken by the shutdown of Molokai Ranch, which resulted in the loss of 120 jobs, and the grounding of Aloha's passenger service, which represented the state's largest-ever mass layoffs.[33] Aloha's shutdown began at the beginning of April when the airline folded the passenger flight service.[35]
Norma Acob, regional manager for Commodity Forwarders, said the company has been in talks for months with the Superferry about offering the service, and did trial runs before Aloha's shutdown. She said if the service is popular, the company will add a second truck or do more runs. "It's filling up pretty quickly," Acob said.[54] Councilman Tim Bynum, who was not on the Council when the resolution was passed, said that despite Aloha's shutdown, the Superferry should not return until all environmental impacts have been studied and mitigated. "Then, I think, they will find the people of Kauai more receptive," he said. "We have very specific concerns on Kauai that other islands may not have," such as invasive coqui frogs and mongooses.[43] Katie Anderson, executive director of the Hawaii Food Manufacturers Association, predicts the Aloha shutdown will affect how a range of perishables, from produce to tofu, get to supermarkets. Neighbor Island residents will likely be hardest hit, but O'ahu consumers will also see the difference, she said. "It's going to have a terrible effect on our food shippers," she said.[54] In terms of mail, there was 16,500 tons sent to the Neighbor Islands, and 2,200 sent to Honolulu. "The main concern now is the flowers," said Art Angel of Angel Freight Hawaii, who said he wasn't having any problems with the shutdown, having switched his shipments to Hawaiian Airlines several weeks ago.[12]
"I consider the shutting down of cargo service between our islands legitimate. If someone on the neighbor islands cannot get food and then we start to run out on food at the supermarkets and then people start hoarding and then the supermarkets are empty and we cannot refill them then it creates a cycle that becomes very devastating," said Sen. Kalani English.[45]
All cargo flights scheduled to go last night were canceled. A: The company is in the process of laying off its 300 cargo workers as of late yesterday. That follows the layoffs of about 1,900 passenger service workers on March 31.[32]
Aloha said last night that it was in the process of informing cargo employees about the layoffs.[33] Customers lined up with packages and freight items to be sent on Aloha's cargo flights. but it would be the last time Aloha's doors would be open.[38] Aloha cargo's collapse has Mayor Tavares calling for sustainability. "We've also got to look at food sustainability, and this has kind of been on the back burner because renewable energy has kind of been on the front burner lately,''' said Tavares.[57]

Hawaii Superferry, which carries cargo on its trips between O'ahu and Maui, said it will do all it can to help companies maintain their interisland deliveries. [44] On Maui, even the Superferry joined in the massive effort to keep the state's cargo moving.[45] '''I think that's true because we have the ability to get cargo to Maui off and on through the Superferry," said Maui County Mayor Charmaine Tavares.[57]
For some farmers, shipping by barge is not an option because it takes too long (about a day). The Superferry is also not an option for some, since shippers are required to accompany their cargo. At least one business, though, will be offering space on a large truck to be shipped on the Superferry.[54] Tanouye said one of the big problems is that to put cargo on Hawaiian Airlines, shippers must have special documentation from the Transportation Security Administration since the items are loaded onto passenger planes.[54] Ramp agent Justin Nishimura rearranged passenger and freight cargo yesterday aboard a Hawaiian Airlines plane that would soon be headed for Kauai.[3]
Cargo agent Michael Loo was among workers at Honolulu Airport yesterday loading freight aboard a Hawaiian Airlines jet bound for Kauai.[3] Hawaiian Airlines' cargo area at Honolulu Airport was bustling yesterday as workers loaded freight aboard a Kauai-bound jet.[3]
'''We'''ve been OK so far.''' Monden said while he'''s giving Commodity Forwarders a test run Friday, he'''s also considering other options such as Hawaiian Airlines cargo and Young Brothers.[41]
Barge service by Young Brothers and Hawaii Superferry, and Hawaiian Airlines are now left as primary sources to fill the void.[17] Some customers are using Hawaiian Airlines or other airlines, barges or the Hawaii Superferry.[32]
We have a short term glitch that Hawaiian Air, and the smaller airlines are scrambling to make up. Probably they'll have it covered in a few days. That consolidator with a refrigerated truck on HSF might help out with the drawbacks that have kept shippers from using the Superferry (having to dedicate a truck and driver to the journey).[41]
State administrators and county officials are consulting with other air carriers and sea shippers to find out what services are available. Governor Lingle says she has no plans to call a state of emergency because of the shipping problems. (Copyright 2008 Associated Press.[49] The ferry service also halted in February and March for repairs needed to the 350-foot vessel. Kula farmer Chauncey Monden said he'''s also going to give Commodity Forwarders a try when he sends out his goods on Friday. Monden canceled two shipments of strawberries on Tuesday, worried he would not be able to find a shipper despite a commitment to his Oahu customers. '''They were empathetic. They know we have no control over the situation,''' Monden said. He was able to sell the strawberries on Maui. Geoff Haines of Waipoli Hydroponic Greens said 40 percent of his business involves shipping lettuce three times a week to an Oahu distributer who sells it to high-end restaurants.[41] Saltchuk Resources has held a business presence in Hawai'i since 2000 when it acquired Young Brothers/ Hawaiian Tug & Barge; the company also acquired Hawaii Fuel Network, Maui Petroleum and Minit Stop Stores in 2006.[34] The company is concerned that as Aloha's shutdown reverberates, Hawaiian's space will be in great demand. This also comes near the start of May, which is a big month for the business.[12]
Aloha abruptly closed its profitable air freight business yesterday after its lender, GMAC Commercial Finance LLC, cut off financing.[33] Saltchuk Resources Inc. of Seattle was one of two main bidders for the unit, but the deal fell apart amid a dispute over terms set by Aloha's main lender, GMAC Commercial Finance.[37] Aloha and Saltchuk had planned to issue a news release last night announcing the sale, but the deal ran into a last-minute snag due to questions from Aloha's court-appointed trustee Dane Field, several people familiar with the process said.[16]
Sources also have said that Muranaka, the assistant U.S. trustee who appointed Field, is planning to file a motion to dismiss the case. Such a move would remove the stay that has kept creditors from suing Aloha and would enable various parties to work out deals outside the auspices of Bankruptcy Court. Muranaka said yesterday she could neither confirm nor deny whether she planned to file such a motion. She also declined to comment on whether Field planned to resign as trustee.[3] "There were misunderstandings about what the deal was going to be and they could never get on the same page after that," said attorney David Farmer, who represents Aloha in its bankruptcy case.[52]
Aloha attorney Paul Singerman informed federal Bankruptcy Court that the company's board of directors had decided to convert the case to a Chapter 7 liquidation from a Chapter 11 reorganization.[2] John Riddel, an Aloha pilot and member of the pilots union, yesterday said people were still baffled about why the purchase unraveled so quickly and why GMAC insisted on 11th-hour changes ' even after the bankruptcy court signed off on the parameters. "Therein lies the big question," Riddel said. "Everybody's scratching their heads on why (GMAC) did that.[52]
The division stopped operating on Monday when Aloha's potential buyers pulled out of negotiations and the airline filed for Chapter 7 bankruptcy. "People are entitled to know if they are going to be paid for their work," King said.[35] Airline attorneys say GMAC Commercial Finance's decision to stop financing Monday came after two companies interested in buying the cargo division pulled out.[5] The airline and its main lender, GMAC, are discussing a potential sale of cargo to one of the two companies that dropped out of the bidding, sources said.[48]
Saltchuk said GMAC has agreed to resume funding the cargo operations as soon as an agreement has been approved.[24] Washington state-based Saltchuk Resources said it received approval from Aloha's main lender, GMAC Commercial Finance, to buy the operations.[51] Seattle-based Saltchuk Resources Inc. said it had obtained the consent of Aloha's main lender, GMAC Commercial Finance.[11]
Saltchuk had bid $13 million but withdrew from the bidding process April 24 after Aloha asked for $20 million.[24] One of the two companies, Jupiter Holdings Group, said it bowed out when Aloha and GMAC increased the asking price to $15 million.[5]

Aloha Airlines Chief Executive Officer David Banmiller said Wednesday a new owner was in the wings. [36] Attorneys for the lender, potential buyer, and Aloha Airlines are back in court this afternoon, after a recess several hours long.[34]
The customers are the nine U.S. and international airlines Aloha serviced for years from the lobby to baggage and maintenance.[7] "We're hopeful, yet very cautious on what may happen." Others had the foresight like Angel to move away from Aloha even though they were longtime freight customers. At Big Island-based Pacific Floral Exchange, that meant putting more shipments on to direct flights to the Mainland, even if it entailed trucking the flowers to Kona so they could be sent out. "It's nothing I wanted to do," said Mike Inouye, Pacific Floral sales manager.[12] Love's was Aloha's biggest customer, shipping an average of 36,000 pounds of baked goods daily.[12]

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Contract services operate check-in, luggage handling, cabin cleaning and other ground services for 20 airlines in Hawaii. [8] The unit handles nearly all ground operations for major international and domestic airlines that fly into Hawaii.[1] "Right now a lot of goods have to be moved all across the state and someone has to move it so we'll do whatever we can with the equipment we have," said David Dart, Alpine Air Hawaii Station Manager.[39] The '''perfect storm''' I spoke of last week is upon us. Its fury will dwarf all other issues confronting these islands. The state and federal governments have no clue as to the magnitude of the damage this storm will do to the people of Hawaii and the very fabric of our society. Even with events smacking them in the face, Hawaii'''s leaders remain oblivious to the signs of the coming times. They have no emergency plan because in their state of denial, they cannot fathom not having the bare necessities like food readily available.[40]
The shutdown has seen the loss of 300 jobs and the end of a business that handled about 85 percent of all goods flown between Oahu and neighbouring islands.[42]
"Obviously we are going to make a plea to have our union be re-recognized and if that doesn't work than there are other means of trying to get our membership to vote on it," said Union representative Randy Kauhane. In the meantime, contract employees continue to work despite not knowing if or when they'll be paid. "These are people with character, quality, they care about the community, they care about their jobs, they care about their customers -- and this is just a further demonstration of the characters in this company," said Banmiller. "The people have been fantastic -- they're working on faith, they don't know -- all they've got is my personal guarantee that they're going to get paid -- and they're believing me," said Ward. Ward says she's grateful for their faith -- knowing its been a week of confusion for everyone.[50] The division employs about 950 people. Ward said she plans to keep everyone. Ward said that a number of her employees work at a higher pay rate. She said that some of the Aloha employees would get a pay raise to match her company's pay scale. This material may not be published, broadcast, rewritten or redistributed.[8] Feb. 17, 2006: Aloha exits bankruptcy 14 months after filing for Chapter 11 protection. April 28, 2006: Aloha terminates pensions of nearly 4,000 of its employees and retirees and turned the plans over to the Pension Benefit Guaranty Corp.[30]
The number of employees was severely reduced by 1,900 on March 31 when the company abruptly shut down passenger operations.[22] Saltchuk, which is also the parent company of interisland shipping operations Young Brothers and Hawaiian Tug & Barge, did not reveal a purchase price.[47] September 2002: Aloha and Hawaiian receive federal approval for an antitrust exemption, clearing the way for the two carriers to begin coordinating capacity on several key interisland routes.[30] The shutdown of Hawai'i's largest interisland air-cargo carrier has left the state scrambling to fill a huge void.[17]
The company may bring in a second interisland cargo aircraft if there is a need.[6] Brewbaker said it will be more difficult to attract a new competitor to the interisland cargo market than several years ago given turmoil in the nation's credit markets and high fuel prices.[33]
GMAC said yesterday it was unwilling to provide further financing, and that forced the cargo division to shut down.[32] Media reports said the decision by GMAC Commercial Finance came after two companies interested in buying the cargo division pulled out.[55]
U.S. bankruptcy court will appoint a trustee to oversee the cargo division's liquidation.[5]
Banmiller declined to identify the potential buyer but a person familiar with the deal said that the parent of Seattle-based owner of Young Brothers/Hawaiian Tug & Barge has renewed its interest in the cargo unit.[31] Everything is going to get more expensive, real bad," said Dart. The U.S. Postal Service has also solved its shipping problems. It struck and emergency deal with Corporate Air which partners with Alpine Air.[39]
Gov. Linda Lingle and the mayors of Maui, Kauai and the Big Island were discussing options for continued interisland air-cargo service.[55] One neighbor island appears to be in better shape than others. The Hawaii Superferry was met with protest this past summer when it made its first trip to the Valley Isle.[57]

Sources told KITV that negotiations were done to potentially resurrect the carrier's cargo business. [48] Aloha Chief Executive Officer David Banmiller says discussions are under way to turn over the unit to a new owner.[49] Last year, Northern Air was ranked the 36th largest Alaskan-owned, Alaska-based company in the state. It has annual revenues of more than US$50 million and was ranked as Alaska's 96th largest private employer last year.[58] June 9, 2006: go! airlines enters the interisland airline market with $39 one-way fares.[30]
SOURCES
1. Pacific Magazine: Aloha Air Cargo Operations May Be Revived 2. Bidders drop out and funding halts | starbulletin.com | News | /2008/04/29/ 3. Aloha's glimmers of hope | starbulletin.com | News | /2008/05/01/ 4. Star-Bulletin Breaking News - Judge orders immediate sale of Aloha airport services unit 5. The Associated Press: Aloha Airlines shutting down cargo division 6. Pacific Air Cargo Joins Interisland Service - Hawaii News Story - KITV Honolulu 7. Aloha'''s ground service buyer says business as usual | KHON2 FOX | KHON News 8. Judge Approves Aloha's Contract Services Sale - Hawaii News Story - KITV Honolulu 9. Aloha Now Says Contract Services Not Axed - Most Popular News Story - KITV Honolulu 10. KESQ.com Palm Springs, Coachella Valley - Weather, News, Sports: Last vestige of airline still hanging on 11. Seattle-based company to buy Aloha Airlines' cargo operation | Chron.com - Houston Chronicle 12. Hawaii bakery ships interisland via L.A. | HonoluluAdvertiser.com | The Honolulu Advertiser 13. Remaining shippers take up airline's slack | starbulletin.com | News | /2008/05/01/ 14. Aloha Cargo customers left scrambling | HonoluluAdvertiser.com | The Honolulu Advertiser 15. Aloha cargo shutdown strands businesses - Pacific Business News (Honolulu): 16. New bid for Hawaii air cargo company | HonoluluAdvertiser.com | The Honolulu Advertiser 17. It's unclear how cargo void will be filled | HonoluluAdvertiser.com | The Honolulu Advertiser 18. KHNL NBC 8 Honolulu Hawaii |Aloha Cargo Shuts Down 19. Carriers expand fleets to meet demand | starbulletin.com | News | /2008/04/30/ 20. Hawaii struggles after cargo shutdown | HonoluluAdvertiser.com | The Honolulu Advertiser 21. Hawaii Reporter: Hawaii Reporter 22. Star-Bulletin Breaking News - Aloha Airlines shuts down remainder of operations 23. Aloha Airlines shuts down cargo operations | HonoluluAdvertiser.com | The Honolulu Advertiser 24. Aloha Airlines Cargo sale moves closer - Pacific Business News (Honolulu): 25. Aircargo Asia Pacific - Aloha closes cargo arm 26. Aloha shuts down cargo operation; 400 out of work; Neighbor Island freight grounded - Pacific Business News (Honolulu): 27. State leaders fumbled in island shipping predicament | starbulletin.com | Editorial | /2008/04/30/ 28. Aloha Cargo May Open With New Owner | KHON2 FOX | KHON News 29. Aloha and hard times in Hawaii (Dealscape) 30. History of Aloha Airlines | HonoluluAdvertiser.com | The Honolulu Advertiser 31. Aloha close to selling cargo unit to Young Bros. owner | HonoluluAdvertiser.com | The Honolulu Advertiser 32. Aloha Airlines Q and A | HonoluluAdvertiser.com | The Honolulu Advertiser 33. Hawaii loses 85% of air cargo capability | HonoluluAdvertiser.com | The Honolulu Advertiser 34. Update: Aloha Cargo Deal In Court, Contract Services Sold | KGMB9.com | Cargo, Saltchuk, Air, Business, Gmac 35. Judge Urges Buyer, Aloha To Work Out Details - Hawaii News Story - KITV Honolulu 36. SignOnSanDiego.com > News > Business -- Aloha cargo operation may come back 37. Star-Bulletin Breaking News - Deal set to resume Aloha cargo flights 38. Aloha's Customers Scramble | KHON2 FOX | Local Top Stories 39. Higher Prices Predicted From Cargo Collapse | KGMB9.com | Have, Air, Going, Hawaiian, Get 40. Hawaii Reporter: Hawaii Reporter 41. Freight handlers picking up loads stranded by shutdown | Maui News 42. Aloha Air shutdown hits Hawaii farmers 43. Kauai feeling brunt of cargo woes | starbulletin.com | News | /2008/05/01/ 44. Superferry said it will do what it can to help interisland deliveries | HonoluluAdvertiser.com | The Honolulu Advertiser 45. KHNL NBC 8 Honolulu Hawaii |What's Next for State's Cargo? 46. Remaining carriers see void to be filled | Maui News 47. Aloha Airlines Cargo saved by new buyer, same as the old buyer | Hawaii Magazine: Discover Hawaii 48. Bidder Negotiating For Aloha Cargo - Most Popular News Story - KITV Honolulu 49. KPUA.net - KPUA Hawaii News - Aloha holds out hope of cargo service resuming 50. The Sale of Aloha's Contract Services move forward | KHON2 FOX | KHON News 51. Saltchuk Announces Agreement To Buy Aloha Cargo - Most Popular News Story - KITV Honolulu 52. Bidders rejected last-minute revisions to deal | HonoluluAdvertiser.com | The Honolulu Advertiser 53. Hard-hit flower sellers explore shipping options | starbulletin.com | News | /2008/04/30/ 54. Higher Hawaii produce prices expected | HonoluluAdvertiser.com | The Honolulu Advertiser 55. Welcome To Air Cargo World -- Breaking News 56. Aloha notifies court of liquidation plan | HonoluluAdvertiser.com | The Honolulu Advertiser 57. Maui has options for getting goods off and on the island | KHON2 FOX | KHON News 58. Aircargo Asia Pacific - Saltchuk buys Northern Air Cargo

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