$2.2 Million Sale Price Will Pay Off Main Creditors

Aloha Airlines, which ended passenger service last month in the face of competition from Mesa's go! subsidiary, has been struggling to move forward with sales of its other divisions. The company's hopes of selling its air cargo division have been placed in jeopardy by assertive creditors, and pilots threatening to strike.

Now, The Honolulu Advertiser reports Aloha has a $2.2 million offer to sell its aviation services division to Pacific Air Cargo, a Los Angeles company with extensive operations in Hawaii and Samoa. The Aloha division provides customer service, baggage handling, ticket and ramp agents in Hawaii for Japan Airlines, United, and other clients.

As ANN reported, Aloha filed for Chapter 11 bankruptcy March 20, asserting it would continue flying through reorganization. That prognostication lasted 11 days; the carrier discontinued all passenger-carrying service March 31.

The Pacific Air Cargo deal would require the approval of the bankruptcy court. Aloha said the deal would preserve many of the service division's 1,100 jobs, and proceeds from the sale would be used to pay Aloha's main lenders.

"We are gratified to have this bidder come forward to preserve the jobs of our employees and to continue the important work of providing aviation services in Hawaii," said Aloha CEO David Banmiller.

The match is seen as a good one for Pacific Air Cargo. Pacific Air opened a 65,000 square-foot facility at Honolulu International Airport last year in support of its flights between Honolulu and Los Angeles and inter-island routes/ The company is also a ground services provider.

There still could be a sale of Aloha's cargo division to report this week. Bidding was extended past the original deadline when the leading bidder had offered $18 million, less than the $20 million minimum demanded by GMAC Commercial Finance, Aloha's lead lender. GMAC has loaned the airline a total of $44 million; Aloha lost $120 million in the last year in its fare war with go! Airlines.

FMI: www.pacificaircargo.com, www.alohaairlines.com