Aloha Airlines shutters, to liquidate air freight division

Aloha Airlines shutters, to liquidate air freight division Bankrupt air carrier Aloha Airlines shut down its still-profitable air freight division Monday, canceling all flights and leaving 85 percent of the island state's air freight in limbo.
   The abrupt closure of the 400-employee division follows a decision by Aloha's primary lender, General Motors Acceptance Corp., to provide no further financing to the division after two firms previously interested in buying it bowed out of the bidding process.
   Aloha filed for Chapter 11 reorganization in U.S. Bankruptcy Court last month. The carrier ended passenger service after the filing on March 31, citing losses stemming from rising fuel prices and a long-running inter-island fare war with rival firms.
   The air freight division, however, remained profitable and initial bidding attracted several firms. Jupiter Holdings Group, initially the highest bidder at $13.65 million, backed out after GMAC imposed additional conditions not in the court order and raised the asking price to $15 million, plus an additional $2.5 million deposit. Seattle-based Saltchuk Resources Inc., parent of Young Brothers/Hawaiian Tug & Barge, had offered a bid of $13 million for the division and another $5 million for accounts receivable, but withdrew from the bidding on April 21 after GMAC demanded at least $20 million as a minimum bid.
   Aloha officials said Monday that the carrier was left with no choice but to liquidate and asked the court to convert the bankruptcy proceedings to Chapter 7 liquidation.
   Hawaii Gov. Linda Lingle said the government was trying to do what it could to ensure continued inter-island air freight service. Aloha's air freight division delivered perishable goods such as bakery products, dairy products, fresh produce, fresh fish, newspapers and pharmaceutical supplies. The firm also carried the majority of the inter-island mail to Maui and the Big Island under contract with the federal government.
   The U.S. Postal Service said Monday it was making alternative plans with other carriers to handle mail service, but warned that some delays could occur.
   The decision to shutter the passenger and cargo divisions, according to King, would not affect the sale of the carrier's contract services division for $2.2 million to Southern California-based Pacific Air Cargo. The contract services division, which was marginally profitable, employs about 950 workers providing baggage handling and other ground services for numerous carriers at Honolulu International Airport. ' Keith Higginbotham