Aloha Airlines may grace Hawai’i’s skies again, though this time the name would be used by the bankrupt carrier’s nemesis, the owner of go! airline.
Mesa Air Group Inc. made the deal with Aloha’s former majority owner, Yucaipa Cos., to use the Aloha name as part of settling a lawsuit in which Aloha alleged that Mesa misused confidential information to launch go! and drive Aloha out of business.
Other settlement terms call for giving Aloha’s roughly 3,500 former employees travel benefits on go!, paying Yucaipa $2 million and making Yucaipa a significant owner of Mesa by issuing the company close to 2.7 million shares of common stock, representing 10 percent of Mesa stock.
Phoenix-based Mesa announced the agreement yesterday, and said it resolves a potentially damaging lawsuit and allows the company to focus on providing interisland air service possibly under the historic Aloha name early next year.
In a way, the pact stands to resurrect a 62-year-old kama’aina airline that ceased flying in March.
But some former Aloha employees cringed at the idea of go! recasting itself as Aloha.
“How ironic is that?” said Wayne Wakeman, a 20-year Aloha pilot who is still hunting for a job eight months after Aloha’s shutdown. “They tried to put us out of business, and now they want to use the name Aloha. It kinda would be a slap in the face.”
Still, Wakeman said he believes most former Aloha employees would use go! travel benefits, despite the ill will toward the airline because similar travel benefits are valuable and were frequently used by Aloha employees when they had them.
Mesa has yet to define what kind of interisland travel benefits it will provide and for how long.
Helen Sham, who assisted passengers as an Aloha flight attendant for 41 years, said she won’t be flying free or at reduced cost on go! or a Mesa-owned Aloha. “They did run us out,” she said. “My feeling is not with them.”
Sham recently landed a job with go! rival Mokulele Airlines, and said the spirit of Aloha has moved on with its former employees.
Hawaiian Airlines, Aloha’s longtime and mostly friendly rival, reserved comment on Mesa’s tentative deal to rebrand itself as Aloha.
Paul Skellon, a spokesman for Mesa, said the primary objective for Mesa settling the lawsuit Aloha filed in January 2007 wasn’t to rebrand go! as Aloha but to remove a potential expense that could have been costly.
A similar lawsuit by Hawaiian against Mesa resulted in an $84 million court judgment that was appealed and then settled this year for $52.5 million.
But if Mesa obtains Aloha’s name, it would give the carrier a strong brand well known in Hawai’i and on the Mainland that would benefit Mesa, especially if the company ever begins transpacific service. Skellon said there are no plans to fly to the Mainland, but it could happen one day.
“We intend to carry on Aloha’s proud tradition, maintain Mesa’s status as Hawai’i’s low-cost air carrier and look forward to future growth opportunities made possible with this settlement,” Jonathan Ornstein, Mesa chairman and CEO, said in a statement.
Mesa’s settlement with Yucaipa is difficult to value. Shares of Mesa stock being issued to Yucaipa are worth around $538,000 based on Mesa stock that closed yesterday at 20 cents a share. On top of the $2 million in cash, Yucaipa plans to license the Aloha name to Mesa for undisclosed terms.
Licensing the Aloha name to Mesa is subject to Yucaipa being the high bidder for the name and other intellectual property at a bankruptcy court auction scheduled for Tuesday.
Anyone wanting to outbid Yucaipa will have to offer at least $575,000 for the intellectual assets under auction guidelines. Yucaipa, as the largest creditor in Aloha’s bankruptcy, has offered to pay $25,000 in cash and forgo trying to collect $500,000 of the more than $106 million it claims to be owed. The company could raise its bid if competition emerges.
Yucaipa made a similar credit bid of $10 million to acquire the rights to Aloha’s lawsuit against Mesa.
Other Aloha assets sold included a contract services division and an air cargo operation now doing business as Aloha Air Cargo.
Yucaipa is a private investment firm headed by California billionaire Ron Burkle. Yucaipa and former professional football player Willie Gault purchased Aloha and brought it out of bankruptcy in 2005.
Aloha was founded by publisher Ruddy Tongg as Trans-Pacific Airlines in 1946, and in 1958 was renamed Aloha Airlines. The airline filed for bankruptcy March 20 after losing more than $120 million in the previous two years because of soaring fuel prices and a heated interisland fare war touched off by go!, then abruptly shut down March 31.