What's In A Name? A Lot Of Sore Feelings

A federal bankruptcy judge has halted an audacious plan by Mesa Air Group to rebrand its Hawaiian inter-island service with the name of the carrier it helped drive into bankruptcy, and out of business.

The Honolulu Advertiser reports Judge Lloyd King slammed both Mesa and Yucaipa Companies, the former controlling shareholder of bankrupt Aloha Airlines, over an agreement reached last month that would allow Mesa to rename its struggling go! Airlines operation as Aloha.

"I don't think anyone is sensitive who's involved in this settlement," King said Wednesday. "If this isn't approved, are people from Yucaipa going to lose their health benefits and their jobs? There hasn't been enough time for people to react."

King postponed a scheduled hearing on the licensing agreement until February 19, to allow those on both sides of the issue time to respond to the plan.

As ANN reported, Mesa announced November 28 it had agreed to a settlement with the former controlling shareholder of Aloha, concerning a lawsuit stemming from Mesa's alleged wrongdoing over pricing. One year prior, a US Bankruptcy Court judge ordered Mesa to cough up $80 million in damages to Aloha's former inter-island rival, Hawaiian Airlines, determining Mesa used information it obtained while bankrupt Hawaiian courted Mesa as a possible investor.

That information included profitability figures for local and Hawaii-US mainland routes, and passenger profiles... which Mesa later used to launch its own airline in 2006. Advertising fares as low as $29, the arrival of go! on the Hawaiian air travel scene shook up the equilibrium that had existed for years between Aloha and Hawaiian Airlines... and contributed to Aloha's March 2008 shutdown, after 61 years of operation. Aloha subsequently sued Mesa, claiming that outcome was due to Mesa's "illegal" practices.

Mesa's plan to acquire rights from Yucaipa to use the Aloha name struck many as a guileful move, given the role go! played in driving Aloha out of business. King drove that point home Wednesday. "How about all the people whose lives were devastated in this case?" the judge asked. "Doesn't that count? Is it just the money?"

Without definitively responding in the affirmative to that question, Yucaipa did point out it owns the rights to Aloha's intellectual property, as part of a separate $750,000 credit bid awarded last week.

That's a drop in the pan compared with the roughly $113 million the company is owed from loans it either helped arrange for Aloha, or made outright to the carrier. Yucaipa hoped the deal with Mesa would help recoup that massive loss, in part by licensing the Aloha brand for 10 years in exchange for a percentage of Mesa's inter-island ticket revenue.

"Everyone knew we were in litigation with Mesa," replied Yucaipa attorney Robert Klyman. "There was no restriction with what we could do with the name."

For its part, Mesa is keeping quiet about the furor...but an official with the local chapter of the International Association of Machinists and Aerospace Workers called the agreement between Mesa and Yucaipa "ridiculous."

"It's a scam to the public to be told that now (go!) is going to use Aloha Airlines' name, because they had a good reputation," said Randy Kauhane, assistant general chairman of District LOdge 141. "It was the workers that built up the name. Let them do their own thing without the Aloha name."

FMI: www.mesa-air.com, www.yucaipaco.com