Aloha Airlines renegotiates aircraft leases, gains wage concessions under plan to reduce costs

By Ellen Chang

Houston, Feb. 28- Aloha Airlines said it has renegotiated aircraft leases, obtained wage concessions from 94% of its workforce and eliminated several flights as part of its plan to reduce costs and exit Chapter 11 bankruptcy protection.

In addition, the U.S. Bankruptcy Court for the District of Hawaii on Friday approved Aloha's motions for $5 million of debtor-in-possession financing out of a total $65 million financing facility and assumption of certain amended aircraft lease arrangements.

Aloha said the renegotiated aircraft leases and wage concessions already in place from 94% of its workforce will help the company reach its goal to cut costs by $60 million.

David A. Banmiller, Aloha's president and chief executive officer, said it is working with Sabre Airline Solutions to examine the route structure of its markets. As a result, Aloha has eliminated air service to the central and south Pacific and will suspend operations in Burbank, Calif. and Vancouver, Canada.

Aloha will be able to return two Boeing 737-700 aircraft this year, while continuing its planned expansion of service from California to Hawaii.

In April, Aloha will increase its non-stop service from Orange County, Calif. to five flights a day, and offer twice-daily service from San Diego. In July, Aloha will add a fourth daily flight from Oakland, Calif. with the new flight being one of two non-stops to Maui.

Aloha's route analysis also determined that non-stop Las Vegas service was unprofitable due to overcapacity and highly discounted fares. Aloha will operate daily Las Vegas service via Oakland in lieu of the non-stop flight, beginning April 3.

Aloha Airgroup, a Hawaii corporation, is the parent of Aloha Airlines. Aloha Airlines operates commercial air transportation services and is based in the state of Hawaii.

Aloha Airgroup filed for Chapter 11 Dec. 30, 2004. Its Chapter 11 case number is 04-03063.

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