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Why Aloha Airlines will stay Afloat.......

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Whale Rider

Unity is Our Strength
Nov 9, 2004
State forgives Aloha tax debt
[FONT=Trebuchet MS, Verdana][SIZE=-2][FONT=Trebuchet MS, Verdana][SIZE=-2]By Rick Daysog
Advertiser Staff Writer
[FONT=Times New Roman, Times, serif]Aloha Airlines is getting a break on state taxes.
[/FONT][FONT=Times New Roman, Times, serif]The state has agreed to forgive more than $1 million owed by Hawai'i's second-largest airline, according to a Bankruptcy Court filing last week.
[/FONT][FONT=Times New Roman, Times, serif]The state also agreed to allow Aloha to delay payments on millions of dollars in delinquent landing fees, the filing said.
[/FONT][FONT=Times New Roman, Times, serif]Aloha plays an important role in Hawai'i's economy by providing competition in the local interisland market, employing a large number of residents and by providing cargo services for the Neighbor Islands, said Kurt Kawafuchi, director of the state Department of Taxation.
[/FONT][FONT=Times New Roman, Times, serif]In addition, Kawafuchi said, the chance for full recovery of taxes owed was slim.
[/FONT][FONT=Times New Roman, Times, serif]Most of the past-due taxes were in the form of unsecured debt, and Aloha has stated in Bankruptcy Court documents that its unsecured creditors would receive about 5 cents on the dollar or less.
[/FONT][FONT=Times New Roman, Times, serif]Aloha, which filed for Chapter 11 reorganization in December 2004, is seeking approval from dozens of creditors, including the state, to emerge from bankruptcy protection in January. The airline declined comment on the agreement to reduce its state taxes.
[/FONT][FONT=Times New Roman, Times, serif]Aloha paid about $5.6 million in state corporate income taxes and $1 million in general excise tax in a one-year period, according to a December report commissioned by the airline titled "The Importance of Aloha Airlines to Hawai'i's Economy."
[/FONT][FONT=Times New Roman, Times, serif]Lowell Kalapa, president of the nonprofit Tax Foundation of Hawaii, says the state is taking a good risk by helping Aloha. If Aloha ceased flying to the Neighbor Islands, the consequences "would be tragic" for the local consumer, Kalapa said.
[/FONT][FONT=Times New Roman, Times, serif]Kalapa added that the state's budget currently has a surplus, and the amount that's being forgiven is relatively small compared to the large tax credits that are being given to high-tech companies and developers, such as Jeff Stone, whose $1 billion development at Ko Olina will be financed in part by a 10-year state tax credit of $75 million.
[/FONT][FONT=Times New Roman, Times, serif]"I think that a million dollars is not all that bad if the state can give $75 million to Jeff Stone," Kalapa said.
[/FONT][FONT=Times New Roman, Times, serif]Under its settlement with the state, Aloha has agreed to repay $5.5 million owed to the Department of Transportation for past-due landing fees but will spread out those payments over several years.
[/FONT][FONT=Times New Roman, Times, serif]The state uses such fees to pay for operations at Hawai'i's airports, including Honolulu International, which is to receive $8 million this year for terminal modernization projects, some as basic as fixing leaking roofs.
[/FONT][FONT=Times New Roman, Times, serif]The airport serves more than 20 million passengers a year.
[FONT=Times New Roman, Times, serif][SIZE=-1]Airline, pilots close to deal on pensions

[FONT=Trebuchet MS, Verdana][SIZE=-2][FONT=Trebuchet MS, Verdana][SIZE=-2]By Rick Daysog
Advertiser Staff Writer
[FONT=Times New Roman, Times, serif][SIZE=-1]Aloha Airlines could announce as early as today an agreement with pilots on whether to terminate their pensions.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha said last month it planned to terminate pensions for more than 3,000 employees and hand them over the Pension Benefit Guaranty Corp., the federal agency that insures basic pension obligation.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha's pilots — some who stand to lose up half of their retirement benefits if the pension is taken over by the federal agency — are the last holdouts, fighting the pension termination.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Unions representing most of Aloha's other employees have agreed to the pension termination in part because the federal agency promises to pay out the full amount they are owed.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Because the pilots' pensions typically exceed limits imposed by the federal agency, their retirement pay could be cut.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha said the new labor agreement with pilots is crucial to its plan to emerge from bankruptcy protection by the end of the year.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha, which filed for bankruptcy protection last December, is in the process of being sold to an investment group that includes former football star Willie Gault and California billionaire Ron Burkle's Yucaipa Companies.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Yesterday was the deadline for federal Bankruptcy Judge Robert Faris to rule on the airline's request to terminate the pensions, but Faris put off a decision until today after the airline said it was close to a deal with the pilots union.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]"There's so much at stake for so many people and parties that we'll figure out a way out of this," said Aloha Chief Executive Officer David Banmiller.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Banmiller declined to discuss specifics. Mike Feeney, spokesman for the 380-member pilots union, confirmed that both sides are "close to an agreement on what to do with the pensions" but declined to elaborate.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Any deal would require approval by a majority of the pilots as well as Faris.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Faris yesterday asked both sides to resolve the matter through negotiations, saying any decision he makes could end up hurting everybody.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Earlier this month, the 2,400-member machinist union approved the plan to turn its pension over to the federal agency.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Also yesterday, members of the airline's flight attendant union voted 178 to 51 to approve a new contract.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Flight attendants don't have a defined benefit pension plan but have a defined contribution plan which will not be terminated. A defined contribution plan means the company does not guarantee pension payments but helps employees save for retirement.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Under the new contract, the airline requires flight attendants to share some of their medical costs.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]"None of us felt we had any options left," said Peggy Gordon, president of the Association of Flight Attendants 405-member Aloha unit. "There's little trust left in the company and there's a feeling of resignation."

[/SIZE]Any AQ guys out there know the outcome yet? Hope it works out for you guys/gals.[/FONT]
Last edited:
Aloha Airlines close to new takeoff
[FONT=Trebuchet MS, Verdana][SIZE=-2][FONT=Trebuchet MS, Verdana][SIZE=-2]By Rick Daysog
Advertiser Staff Writer
[FONT=Times New Roman, Times, serif][SIZE=-1]Aloha Airlines could emerge from its yearlong bankruptcy as early as Dec. 15 under a new owner who promises to invest $100 million in the state's No. 2 carrier.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]The airline settled a pension dispute with its pilots yesterday, and Federal Judge Robert Faris tentatively approved its plan for reorganization.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]"It's a fabulous day," said David Banmiller, CEO of the 60-year-old airline. "This company today is as well positioned as it has ever been in its long history."
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]The rebuilding of Aloha will be welcomed by Hawai'i consumers, who have seen the price of a one-way ticket between islands double over the past decade from about $40 to about $80 today.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]A healthy Aloha competing with Hawaiian Airlines, the state's largest carrier, offers hope to travelers that those prices may eventually fall. In addition, Phoenix-based Mesa Air Group Inc., one of the nation's largest regional carriers, plans to start a new interisland service in the first quarter of 2006 with low-priced tickets.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]"From a consumer's standpoint, I think it's good to have competition, otherwise the airline would charge whatever they could get away with," said Hilton Lui of Wai'alae Iki. Lui, a member of Aloha's frequent flier club, said he flies to Neighbor Islands at least once a month and higher fares have forced him to pass on the cost to clients of his private investigations firm.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha's exit from bankruptcy will mark the first time in nearly three years that one of the state's two main airlines was not operating under court protection. Hawaiian Airlines emerged from bankruptcy in June after seeking protection from creditors in March 2003.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha will emerge from bankruptcy a much leaner airline in better position to compete with low-cost competitors, Banmiller said. The company was able to shed more than $75 million in annual costs during its reorganization, he said.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]The lower costs are in addition to more than $100 million in new financing planned by California billionaire Ron Burkle's Yucaipa Companies and former football star Willie Gault's Aloha Aviation Investment Group, which will become the new owners of Aloha.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Banmiller said yesterday that the new capital will allow the airline to modernize its fleet. The airline plans to replace five of its older Boeing 737-200 jets with newer 737-200s for Neighbor Island flights. Aloha also is considering newer aircraft to replace the Boeing 737-700 jets used on its Mainland flights.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Aloha pilots, who earlier objected to the airline's plans to terminate its pension, yesterday accepted that their pensions will be reduced.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]The pilots pensions will be terminated and turned over to a federal agency as early as Dec. 15 unless new federal laws affecting how companies account for pension losses takes effect.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]If Congress passes those laws by the end of the year, the pilots pension will not be terminated but will be frozen at existing levels, said Daniel Katz, attorney for the pilots union, who noted that the pilots' tentative deal requires approval by the full union.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Pilots stand to lose up to 50 percent of their annual pension benefits if their plans are terminated and handed over to the Pension Benefit Guaranty Corp., the federal agency that insures basic pension benefits.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Under the freeze, the pilots' benefits will remain at existing levels, and the company will not contribute more to the pension fund.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]Katz said the pilots felt pressured to work out a deal.
[/SIZE][/FONT][FONT=Times New Roman, Times, serif][SIZE=-1]"There was a very urgent sense to all parties to make this transaction go through and allow the airline to continue to provide service for the community," Katz said.

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