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Airlines

Name: THE YUCAIPA COMPANIES
7JetSet7 Code: YUC
Status: Currently Not Operational
Region: NORTH AMERICA
City: LOS ANGELES
Country: USA
Employees 7
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Background
(definitions)

FORMED IN 1998. PRIVATE CORPORATE JET AIRPLANE CHARTER SERVICES.

USA (United States of America) was established in 1776, it covers an area of 9,363,123 sq km, its population is 280 million, its capital city is Washington DC, and its official language is English.

SEPTEMBER 1998: 1 757-2J4 (25220), EX-STERLING (STR), BOUGHT FROM BABCOCK & BROWN (BBB).

February 2006: USA Bankruptcy Judge Robert Faris approved modifications to a Plan of Reorganization that clears the way for Aloha Airlines (ALO) to exit bankruptcy protection by mid-February.

"We've cleared all the hurdles and we are hopeful we will have our new funding in mid-February," said David Banmiller, Aloha (ALO)'s CEO. "We're excited that our lead investor The Yucaipa Companies (YUC) will be coming aboard very soon and that we also will have participation by local investors to carry the Aloha Airlines (ALO) tradition forward."

Banmiller said that under the modified plan of reorganization, Aloha (ALO) will emerge with $63 million in equity and very little debt.

March 2008: Aloha Airlines (ALO), which emerged from bankruptcy in February 2006, filed Chapter 11 again and cited actions by Mesa Air Group's "go!" as the main impetus behind the latest filing. "It's a travesty and a tragedy that the illegal actions of a competitor, and other factors completely beyond our control have forced us to take this action," CEO, David Banmiller said. "Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha (ALO)." Company officials said they will ask the bankruptcy court for permission to continue operating while going through Chapter 11 restructuring. Aloha (ALO) and Hawaiian Airlines (HWI) have been engaged in a fierce battle against "go!" since it began low-fare inter-island service with 50-seat CRJs in June 2006. Both took legal action against the startup, charging that Mesa had misused confidential information obtained when it was considering an acquisition of the island carriers. Hawaiian (HWI) was awarded $80 million in October 2007 by a bankruptcy court. Aloha (ALO)'s case is still pending.

The inter-island fare wars and the continued escalation of fuel costs have chipped away at profits for all of the carriers. "In the highly competitive inter-island market, Aloha (ALO) was forced to match "go!"'s below-cost fares at a time when the airline industry was facing unprecedented increases in the cost of jet fuel," Aloha (ALO) said in a statement. "The action taken by Aloha Airlines (ALO) . . . reflects the difficult operating environment in Hawaii (HWI)'s airline industry," Hawaiian (HWI) President & CEO, Mark Dunkerley said. "It is extremely challenging and marked by high operating costs, record high fuel prices and a very competitive pricing structure."

Aloha (ALO) is privately held and does not release financial information, but in December, it confirmed that it had endured a -$15.1 million loss in the 2007 third quarter, widened from a -$9.9 million deficit in the year-ago period. The "Honolulu Star-Bulletin" reported that Aloha (ALO) has posted 16 straight quarterly losses.

(ALO) said it received USA Bankruptcy Court approval to continue operating and that it is looking for a possible buyer. "We are grateful to the USA Bankruptcy Court for enabling us to move ahead and continue all operations while Aloha (ALO) seeks additional investors and new opportunities," President & CEO, David Banmiller said. The airline blamed its financial woes primarily on what it called "predatory pricing" by "go!." However, "go!" accounts for only 7% of the capacity and 8% of the Hawaiian inter-island market. Both Aloha (ALO) and Hawaiian Airlines (HWI) have added capacity since "go!" launched operations. Aloha (ALO) has been in discussions with investors willing to buy some or all of the airline, according to "The Honolulu Advertiser." "We're talking to a lot of people in the industry," Banmiller told the paper, but he declined to name any potential suitors. Aloha (ALO) indicated that its chief financial backer, California-based Yucaipa Co (YUC), cut off funding, forcing the carrier to seek new owners.

November 2008: Aloha Airlines (ALO) may grace Hawaii's skies again, though this time the name would be used by the bankrupt carrier's nemesis, the owner of "go!" airline. Mesa Air Group Inc made the deal with Aloha (ALO)'s former majority owner, Yucaipa Companies (YUC), to use the Aloha (ALO) name as part of settling a lawsuit in which Aloha (ALO) alleged that Mesa misused confidential information to launch "go!" and drive Aloha (ALO) out of business. Other settlement terms call for giving Aloha (ALO)'s roughly 3,500 former employees travel benefits on "go!," paying Yucaipa $2 million, and making Yucaipa (YUC) a significant owner of Mesa by issuing the company close to 2.7 million shares of common stock, representing 10 percent of Mesa stock.

Phoenix-based Mesa said it resolves a potentially damaging lawsuit and allows the company to focus on providing inter-island air service possibly under the historic Aloha (ALO) name early next year. In a way, the pact stands to resurrect a 62-year-old kama'aina airline that ceased flying in March. But some former Aloha (ALO) employees cringed at the idea of "go!" recasting itself as Aloha (ALO). "How ironic is that?" said Wayne Wakeman, a 20-year Aloha (ALO) pilot (FC), who is still hunting for a job eight months after Aloha (ALO)'s shutdown. "They tried to put us out of business, and now they want to use the name Aloha (ALO). It kinda would be a slap in the face."
Still, Wakeman said he believes most former Aloha (ALO) employees would use "go!" travel benefits, despite the ill will toward the airline, because similar travel benefits are valuable and were frequently used by Aloha (ALO) employees when they had them.

Mesa has yet to define what kind of inter-island travel benefits it will provide and for how long. Helen Sham, who assisted passengers as an Aloha (ALO) flight attendant (CA) for 41 years, said she won't be flying free or at reduced cost on "go!" or a Mesa-owned, Aloha (ALO). "They did run us out," she said. "My feeling is not with them."
Sham recently landed a job with "go!" rival Mokulele Airlines, and said the spirit of Aloha (ALO) has moved on with its former employees.

Hawaiian Airlines (HWI), Aloha (ALO)'s longtime and mostly friendly rival, reserved comment on Mesa's tentative deal to re-brand itself as Aloha (ALO). Paul Skellon, a spokesman for Mesa, said the primary objective for Mesa settling the lawsuit Aloha (ALO) filed in January 2007 wasn't to rebrand go! as Aloha (ALO), but to remove a potential expense that could have been costly.

A similar lawsuit by Hawaiian (HWI) against Mesa resulted in an $84 million court judgment that was appealed and then settled this year for $52.5 million. But if Mesa obtains Aloha (ALO)'s name, it would give the carrier a strong brand well known in Hawaii and on the Mainland that would benefit Mesa, especially if the company ever begins transpacific service. Skellon said there are no plans to fly to the Mainland, but it could happen one day.

"We intend to carry on Aloha (ALO)'s proud tradition, maintain Mesa's status as Hawaii's low-cost air carrier, and look forward to future growth opportunities made possible with this settlement," Jonathan Ornstein, Mesa Chairman & CEO, said in a statement.

Mesa's settlement with Yucaipa (YUC) is difficult to value. Shares of Mesa stock being issued to Yucaipa (YUC) are worth around $538,000, based on Mesa stock that closed at 20 cents a share. On top of the $2 million in cash, Yucaipa (YUC) plans to license the Aloha (ALO) name to Mesa for undisclosed terms. Licensing the Aloha (ALO) name to Mesa is subject to Yucaipa (YUC) being the high bidder for the name and other intellectual property at a bankruptcy court auction. Anyone wanting to outbid Yucaipa (YUC) will have to offer at least $575,000 for the intellectual assets under auction guidelines. Yucaipa (YUC), as the largest creditor in Aloha (ALO)'s bankruptcy, has offered to pay $25,000 in cash and forgo trying to collect $500,000 of the more than >$106 million, it claims to be owed. The company could raise its bid if competition emerges. Yucaipa (YUC) made a similar credit bid of $10 million to acquire the rights to Aloha (ALO)'s lawsuit against Mesa.

Other Aloha (ALO) assets sold, included a contract services division and an air cargo operation now doing business as Aloha Air Cargo.

Yucaipa (YUC) is a private investment firm headed by California billionaire Ron Burkle. Yucaipa (YUC) and former professional football player Willie Gault purchased Aloha (ALO) and brought it out of bankruptcy in 2005. Aloha (ALO) was founded by publisher Ruddy Tongg as "Trans-Pacific Airlines" in 1946, and in 1958 was renamed Aloha Airlines (ALO). The airline filed for bankruptcy on March 20, after losing more than >$120 million in the previous two years, because of soaring fuel prices and a heated inter-island fare war touched off by "go!," then abruptly shut down March 31.

December 2008: The Mesa Air Group announced a settlement with the former controlling shareholder of Aloha Airlines (ALO), the Yucaipa Companies (YUC), ending the latter's lawsuit against the "go!" operator and featuring a provision under which Mesa may rebrand its inter-island subsidiary as Aloha (ALO) "in the near future." Mesa will make a cash payment of $2 million, issue shares of common stock equal to 10% of the current outstanding number, provide "certain" travel benefits to former (ALO) employees and license the (ALO) name assuming Yucaipa (YUC) is able to acquire it at an upcoming bankruptcy court auction.

Later, a USA Bankruptcy Court judge blasted Mesa Air Group's plans to re-brand its Hawaiian inter-island subsidiary "go!" as Aloha Airlines (ALO) and refused to approve Yucaipa Company's (YUC) purchase of (ALO)'s intellectual property rights. (YUC), the former controlling shareholder of (ALO), outbid Hawaiian Airlines (HWI) in a bankruptcy auction (it paid $750,000) for the rights to the (ALO) name and, under on an agreement it reached with Mesa "go!" was in position to be re-branded as (ALO) "in the near future." But Judge Lloyd King stated that no decision on the sale of (ALO)'s branding rights would be made until at least February 19 and said the re-branding would be disrespectful to former (ALO) employees. "Mesa and "go!" have been given credit for the demise of (ALO)," he said, according to news reports, adding that allowing "go!" to re-brand as Aloha (ALO) would "stand [the brand] on its head." Mesa reportedly agreed to license the (ALO) name for 10 years in exchange for 1% of its inter-island ticket revenue (minimum $600,000) and 30% of the pre-tax profit earned by the operation.

March 2009: The USA Bankruptcy Court judge invalidated the transfer of the Aloha Airlines (ALO) brand to Mesa Air Group for use on its "go!" subsidiary because the sale by Aloha (ALO) shareholder, the Yucaipa Company (YUC) was not public. A second auction will be held.

Fleet:
(definitions)

Click below for photos:
YUC-757

March 2009:

1 757-2J4 (RB211-535E4) (387-25220, /91 N770BB), EX-(STR)/(BBB),
(ETOPS) EQ'PD), WITH WINGLETS. CORPORATE.

Management:
(definitions)

RON BURKLE, CHAIRMAN.

ROBERT BERMINGHAM, CEO (T: (310) 789-7200).

 
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