A federal judge threw out the sale of Aloha Airlines’ trade name and logo, putting a hold on efforts to rebrand rival go! airline as Aloha Airlines.
U.S. Bankruptcy Judge Lloyd King yesterday ordered bankruptcy trustee Dane Field to conduct a new auction, saying it was an “outrage” to bar a Honolulu Advertiser reporter from attending the auction.
“The sale was not a public sale,” King said. “The sale is declared invalid.”
Once the state’s second-largest airline, Aloha shut down March 31, 2008, and terminated 1,900 workers because of soaring fuel prices and a costly fare war initiated by Mesa’s June 2006 launch of go! interisland airline.
Aloha’s former owner, California-based Yucaipa Co. was the high bidder for the Aloha brand name in an auction held Dec. 2.
Yucaipa, in turn, reached a licensing agreement that would allow go! to fly under the Aloha Airlines banner for 10 years in exchange for a minimum of $6 million. The move was widely criticized by Aloha’s former workers, who blame go! and Mesa for Aloha’s demise.
King said yesterday he did not authorize a private auction and chastised attorneys for Field and Yucaipa for prohibiting an Advertiser reporter from attending the Dec. 2 auction.
The auction, held in a conference room at the offices of Field’s attorneys, was attended by attorneys for Yucaipa and Hawaiian Airlines and local investor Richard Ing.
This reporter had asked to attend the auction but was not allowed in the conference room, despite raising objections about the exclusion.
Randy Kauhane, assistant general secretary for the International Association of Machinists and Aerospace Workers District 141, said he also was excluded.
“The exclusion of a reporter was an outrage,” King said. “It’s the United States conducting the sale, and you told a reporter no.”
James Wagner, Field’s attorney, conceded that he made a “mistake” in not allowing the media to attend the auction. At the time, Wagner said he was concerned that the presence of a reporter would have a dampening effect on the bidding.
Wagner said the ruling will delay the sale by about 60 days but he said he “seriously doubts” whether any other investor will outbid Yucaipa.
Yucaipa, which purchased Aloha in 2005, is owed $95 million and can use that debt as credit to bid on Aloha’s brand name. Yucaipa is headed by California billionaire Ron Burkle.
Robert Klyman, an attorney for Yucaipa, argued that the sale should stand since there was “no evidence of collusion or bid-rigging.”
“There is no secret back-room deal,” Klyman said.
The licensing deal between Yucaipa and Mesa is part of a settlement of an antitrust lawsuit alleging that Phoenix-based Mesa attempted to drive Aloha out of business.
Kauhane, of the machinists union, praised King’s ruling, saying employees feel strongly that the Aloha name should not be sold to Mesa.
“You just don’t sell the name to someone who is credited with shutting down Aloha Airlines,” Kauhane said. “Build your own reputation.”
Barbara Ching, an Aloha Airlines retiree, said the deal rubs salt in the wounds of former employees, who still feel the pain from last year’s shutdown of Aloha.
“It’s as if a friend of mine had fallen and now they’re giving my friend’s name to their enemy,” said Ching, who worked for Aloha for 39 years.
Jeff Portnoy, The Advertiser’s attorney, said King’s ruling is “significant” from the standpoint of the openness of the courts.
“This is … a ringing affirmation of the right of the media and the public to be allowed to attend a judicial proceeding, even if the actual proceeding does not take place in a courtroom,” Portnoy said.