Airline Workers Say 'aloha' To Pensions


Active member
Aug 16, 2004
Total Time
Aloha Airlines' employees and retirees blasted the company's proposal to terminate its pension plans, saying yesterday that the company is using the bankruptcy process to renege on its obligations.

More than 100 Aloha workers appeared at a U.S. Bankruptcy Court hearing to express their outrage at Aloha's proposal to reject its collective bargaining agreements and terminate its defined-pension plans for 3,000 employees.

"You work 30 years building up a retirement but when it's not convenient anymore for these companies to honor these obligations, they simply use the bankruptcy courts as a tool to cut them loose," said Steve Brenessel, who retired last year after 14 years as an Aloha pilot.

U.S. Bankruptcy Judge Robert Faris, who has scheduled another day of hearings Monday, will have the final say on whether the company can terminate its pension plans. Aloha has said it wants to end the pension plans on Dec. 31 and hand them over to the Pension Benefit Guaranty Corp., the federal agency that insures basic pension benefits.

Aloha, which filed for Chapter 11 reorganization in December, said it needs to jettison the pensions to allow a new buyer to take over the state's second largest airline.

Last month, the airline announced that it was being sold to a group headed by California billionaire Ron Burkle's Yucaipa Companies.

"Without the pension change, no investor is willing to go forward with a commitment," said Charles Dyke, an attorney for Aloha.

The airline says most of its employees will see little change in the level of pension benefits if it hands them over to the federal agency.

The exceptions are pilots and retired pilots, whose benefits could drop significantly.

Brenessel, who retired for medical reasons last year at age 54, said his benefits will be cut from $3,400 a month to about $1,400 a month under the new plan.

When the federal pension agency takes over a company's pension plan, it caps pension benefits for retirees 65 years or older at about $45,000 a year, which is about half the amount many of Aloha's senior pilots are entitled to.
Anyone who retires before age 65, isn't eligible for the full $45,000 a year.
Pilots are required by law to retire at age 60, meaning that they aren't entitled to the maximum benefits under a pension administered by the federal agency, Brenessel said.

David Talbert, who retired last year after working 27 years as a pilot with Aloha, said he stands to see a 60 percent reduction in his monthly pension benefits if the judge rules in the airline's favor.

Talbert, 61, said he now has to consider the prospect of going back to work.
Opposition to the pension proposal wasn't limited to pilots.

"I think the membership is very defiant and angry that the company would go back on their promise after we made so many sacrifices for the company," added Karen Nakaoka, a vice president with the 400-member Aloha unit of the Association of Flight Attendants.

During yesterday's hearing, Aloha argued the airline has no choice but to seek the new concessions.

Besides the termination of the pensions, the airline is also negotiating with unions on other concessions, including requiring workers to pay 20 percent of their medical insurance premiums, which are now fully covered by the company.

Dyke, the airline's attorney, said Aloha has met with nine potential buyers or lenders during the past year and all have said they need the airline to terminate the pensions before they would invest in the airline.

Dyke said the airline's lenders — Ableco Finance LLC and Goldman Sachs Credit Partners LP — could begin liquidation proceedings if the current sale to the Yucaipa group falls apart.

"It's obvious what's being requested is going to have an adverse impact on their lives," added Lorenzo Marinuzzi, attorney for Aloha's unsecured creditors, which supports the termination of the pensions.

"What is also terrible is the shutdown of the airline and the loss of 3,500 jobs."

At the end of yesterday's hearing, Faris urged union and management to continue to negotiate a settlement over the weekend.

"Any deal you make will be much better than any deal that I impose on you," Faris said.
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Clone War veteran
May 9, 2003
Total Time
this is a much better article...

Aloha Air’s unions fight back in court

Lawyers for pilots and flight attendants say the carrier is posting operating profits

By Stewart Yerton

Concessions already secured from union employees have allowed Aloha Airlines to generate a substantial operating profit, indicating the airline does not need more givebacks from pilots and flight attendants to survive, a lawyer for the airline's pilots said yesterday.

Aloha posted an $8.3 million operating profit in the first eight months of this year and projects it will generate another $3.7 million in operating profit for September through December, said Daniel Katz, an attorney for the Air Line Pilots Association.
"That adds up to a $12 million operating profit over the course of the year," Katz said, pointing to financial statements Aloha has submitted in court.

Katz's comments followed an all-day hearing yesterday in U.S. Bankruptcy Court, where the airline's pilots and flight attendants are fighting Aloha's request to cancel and change their contracts.

Aloha says that its main investor, Yucaipa Corporate Initiatives Fund I LP, requires the contracts to be altered, and employee pension plans eliminated, under its agreement to save the carrier. Yucaipa leads an investor group that has pledged $100 million in equity and debt to Aloha.

Aloha technically is seeking to terminate its contracts with some 3,100 unionized workers. However, Aloha has forged tentative agreements for new contracts with approximately 2,500 of these workers, including dispatchers and some 2,400 mechanics, clerical workers, agents and inspectors.

But the pilots and flight attendants are another matter. Unable to reach a new agreement with those workers that will satisfy Yucaipa, Aloha has asked for the court's permission to terminate its contracts with the workers, a request known as an 1113 motion.

The pilots and flight attendants say that, in exchange for earlier concessions, Aloha gave them specific written assurances that the airline would not file motions to terminate the contracts.

"The employees didn't think it was meaningless," David Borer, an attorney for the flight attendants, said of an 1113 waiver that Aloha gave the attendants. "We got that in exchange for painful concessions. If the letter means anything, it means (Aloha management) can't be in here using this tool against us."

U.S. Bankruptcy Judge Robert Faris said he was going to allow Aloha to make its case to terminate the contracts. But Faris said the existence of the waiver could raise questions about whether Aloha has negotiated in good faith.

"I'm troubled that the waiver is there and that (Aloha) is proceeding in the face of it," Faris said.

Aloha's attorney, Charles Dyke, said the carrier's situation has changed since Aloha made the agreements with the pilots and flight attendants in late 2004 and early this year.

Since then, the company has faced sharp increases in the price of jet fuel, which has driven up operating costs, Dyke said. Plus, Aloha's bankruptcy lenders began to pressure Aloha to find an investor. Finally, Dyke said, stating a mantra repeated by Aloha throughout the hearing, "Without the pension changes, no investor has been willing to come forward and commit."

The concessions that Aloha wants go beyond the pension issues. According to Dyke and other Aloha representatives, investors also want contract changes that will allow Aloha to operate more like a "low-cost carrier," such as Southwest Airlines.

But getting Aloha executives or representatives to define the key characteristics of a low-cost carrier proved difficult. During cross-examination by Katz, Mark Bilbao, a financial adviser who helped Aloha finds its investors, struggled to explain just what it meant to be a low-cost carrier -- even though Bilbao had submitted a written statement to the court that all of the potential investors wanted the airline to operate as a low-cost carrier.

Meanwhile, Katz hammered on Aloha's financial statements. Although the company has failed to generate net income, it has posted positive operating income as well as positive earnings before interest, taxes, depreciation and amortization -- a measure of cash flow that financial analysts frequently use to measure the health and value of a company.

The positive performance, Katz said, suggests that concessions already given by the pilots and flight attendants are adequate.

Aloha spokeswoman Stephanie Ackerman said the company needs still more concessions to appease investors. Ackerman said that Aloha's disclosure statement for its bankruptcy reorganization specifies the company's labor agreements must be "modified."

Changes to work rules for pilots and flight attendants, which the company refers to as "productivity" concessions, are needed to give management the flexibility it needs to operate like a low-cost carrier, she said.

The hearing is scheduled to continue Monday.

While both sides expressed a desire to reach an agreement, the threat of a strike that would shut down the airlines lurked yesterday in court.

Amidst the throngs of uniformed pilots at the hearing were two children wearing T-shirts bearing the slogan: "No Pilots, No Aloha." The message echoed signs carried by pilots who picketed outside Aloha's headquarters on Thursday.

As for the flight attendants, their union "believes it has the right to strike if the company terminates our contract," said Karen Nakaoka, a spokeswoman for the union.

Put that in your pipe and smoke it VANMAN.
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