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Aloha Says Goodbye

After more than 60 years in existence, Aloha Airlines this week converted its recent Chapter 11 bankruptcy restructuring to a Chapter 7 liquidation case. This means that a trustee will dispose of the airline’s assets.

Since Aloha is liquidating, other entities can pick and choose which assets, if any, they want. Unfortunately, purchasers of assets in Chapter 7 liquidation are not required to hire Aloha employees or honor collective bargaining agreements.

"Aloha Airlines is the latest casualty of airline deregulation," said IAM General Vice president Robert Roach, Jr. "Under deregulated market conditions, the airline industry as a whole cannot be both profitable and competitive. Since this industry is essential to our nation’s commerce, the government must step in and introduce some sane controls before more airlines and airline jobs disappear."

The IAM will continue fighting to protect as many jobs as possible, and assist those that lose their jobs as a result of Aloha’s demise. The Machinists Union’s Department of Employment Services is assisting members affected by Aloha’s shutdown.

IAM Transportation NewsWire http://www.goiamnow.org/05.01.08.NWire.pdf

Aloha Airlines Ceases Passenger Operations

Dear Sisters and Brothers:

Printable Version

After a proud history spanning more than 60 years, Aloha Airlines has made the painful decision to cease its passenger operations effective April 1, 2008. International and District staffs have been dispatched to work closely with your Local Lodge representatives and assist the membership in any way possible.
 
Employees courageously fought for the airline’s survival, making extreme sacrifices during the company’s first trip through bankruptcy court. The restructuring IAM members made possible could not prevent the shock being experienced today, but it should have. Forces beyond the control of management and employees controlled Aloha’s destiny: predatory pricing, exorbitantly high fuel prices and a distressing lack of government regulation conspired against Aloha’s success. While employees tried valiantly to save their airline, others fought to see it disappear. Aloha is a victim of corporate homicide.
 
A potential buyer for Aloha’s cargo unit and contract services has been found and is seeking bankruptcy court approval to take over these operations. How this will affect these employees is not yet certain, but these units will continue operating for the time being.

The IAM will continue fighting to protect as many jobs as possible, and assist those that lose their jobs as a result of Aloha’s demise. The Machinists Union has a Department of Employment Services with the resources and programs to assist members affected by Aloha’s shutdown. The Machinists Union will not abandon our Aloha members. You will be receiving information on how to deal with the sudden unexpected loss of employment and how to apply for state unemployment benefits, as well as other advice. The IAM will also try to find work for our displaced Aloha membership. You will be advised when meetings with the Employment Services Department are scheduled, and we strongly encourage you to attend.

Grand Lodge Representative Samson Poomaihealani has been assigned to represent the Grand Lodge in this matter. He will be working with the Local and District Lodges to provide support for our Aloha members.

We thank the Aloha membership for decades of strong solidarity and support. You will always be part of the Machinists Union family.

Mahalo,

S.R. (Randy) Canale
President and Directing General Chairman
IAMAW District 141

Aloha Airlines at Critical Juncture

Dear Sisters and Brothers:

Printable Version

An Aloha Airlines bankruptcy court hearing is scheduled for Monday, March 31, 2008. Aloha complained in a previous court appearance that go! Airline’s predatory conduct contributed to the need for the bankruptcy and confirmed that Aloha Airlines is for sale. At that hearing, Judge King approved the interim use of cash collateral to continue operating the airline and pay wages and other employee related expenses. The airline is expected to update the court on its progress in finding a buyer or significant investor at the March 31 hearing.

Media reports suggest that Aloha Airlines may cease operations if a buyer is not found. High fuel prices and unrealistically low inter-island fares have caused Aloha’s precarious condition, not its employees. The fact that Aloha has not asked for any concessions from employees is telling for two reasons: Aloha acknowledges the substantial contributions its employees have already made to the airline, and the carrier recognizes that its condition is so dire that any additional employee sacrifice will not improve Aloha’s current situation.

Seattle-based Saltchuk Resources, Inc. has made an offer to buy Aloha’s cargo operations, but not the passenger operation. Approval of the Saltchuk offer is subject to possible higher and better offers from other parties. There have been no offers at this time for the entire business.

Aloha employees have a long and proud history, and your union will fight to keep the airline alive and our members employed.

You will be updated as events occur.

Fraternally,

S.R. (Randy) Canale
President and Directing General Chairman
IAMAW District 141

March 21, 2008

Aloha Returns to Bankruptcy Court

To: All IAM Members Employed by Aloha Airlines

Printable Version

Dear Sisters and Brothers:

Aloha Airlines has landed in bankruptcy court for the second time in three years. Unfortunately, Aloha members are seasoned veterans of bankruptcy wars. The Machinists Union has not been contacted about what plans Aloha may have, if any, regarding IAM members. What is known, however, is the tremendous sacrifice IAM members made during the carrier’s previous trip through bankruptcy court.

IAM members survived Aloha’s last bankruptcy scarred, but not defeated. Aloha management has not indicated what plans they may have regarding our membership, but IAM members have already made all the sacrifice they can. The Machinist Union’s proven bankruptcy team will aggressively protect the interests of our Aloha Airlines membership.

Rumors abound at times like these. The IAM has prepared a bankruptcy Q&A to address some of the most immediate concerns and we urge you to contact your local or district IAM representative with any questions you may have. The Q&A is available on the District 141 website, www.iam141.org.

As we go forward and navigate the treacherous waters of bankruptcy, shareholders, banks, airline executives, and countless others will have diverging agendas. The Machinists Union’s only concern is the well-being of our members. We will utilize all our resources to ensure you have a strong, effective voice throughout the proceedings,

You will be kept updated as soon as more information becomes available.

Thank you for your solidarity and support.
Fraternally,

S.R. (Randy) Canale
President & Directing
General Chairman

March 21, 2008

Bankruptcy Q&A

Printable Version

for IAM-Represented Employees at Aloha Airlines

The IAM, in conjunction with our bankruptcy attorneys, has prepared this document to explain how bankruptcy laws apply to Aloha Airlines employees.

This document is not intended to try to answer every individual question the membership has about bankruptcy, but we will try to answer as many as we can. Please contact your local union representatives with any additional questions so they can forward them to the appropriate district representative for an answer. We will add to this document as necessary.

Q: What is the goal of a “Chapter 11” bankruptcy?

A: The main purpose of a “Chapter 11” bankruptcy is to relieve a debtor (in this case, Aloha Airlines) of debts, thereby providing an opportunity for a fresh start. This is different from a “Chapter 7” bankruptcy, which involves the company shutting down its operations and the company’s assets being sold off. In each of the following questions, when the term “bankruptcy” is used, we are referring to a Chapter 11 bankruptcy. A Chapter 11 bankruptcy could include selling off some or all the Company’s assets as part of reorganization.

Q: Do we continue to get paid when the airline is in bankruptcy?

A: Yes. Things like wages, salaries, and sick leave are considered as normal administrative expenses while in bankruptcy. The bankruptcy laws assure that employees will continue to be paid for their services during the reorganization. In addition, certain “pre-petition claims,” for items like unpaid medical expenses and other benefits are given priority status in bankruptcy, meaning that they are paid before any other general unsecured claims.

Q: Do we still have collective bargaining agreements in effect in bankruptcy?

A: Yes, the IAM continues to represent you for collective bargaining purposes and our contract remains in effect. However, the company may determine to ask the court for permission to reject our collective bargaining agreements.

Section 1113 of the bankruptcy code lays out the rules an employer must follow if it determines to seek to reject labor contracts. It ensures that negotiations between a Chapter 11 employer and a union occur before the company asks the court to allow it to reject a collective bargaining agreement. It lays out the stringent standard by which a bankruptcy court must evaluate an application to reject an agreement, and it establishes a time frame in which the court may make its determination.

A collective bargaining agreement remains in effect, and the collective bargaining process continues, after the filing of a bankruptcy petition “unless and until” the company complies with the provisions of Section 1113. Accordingly, before the court may authorize the rejection of a collective bargaining agreement the company must prove to the court that the following nine (9) requirements have been met:

1. The company must have made a proposal to the union.

2. The proposal must be based upon the most complete and reliable information available at the time of the proposal.
 
3. The modifications must be necessary to permit reorganization.

4. The modifications must provide that all affected parties are treated fairly and equitably.

5. The company must provide the union with such relevant information as is necessary to evaluate the proposal.

6. The company must have met with the collective bargaining representative at reasonable times subsequent to making the proposal.

7. The debtor must have negotiated with the union concerning the proposal in good faith.

8. The union must have refused to accept the proposal without good cause.

9. The balance of the equities must clearly favor rejection of the agreement.
 
If the court agrees that the company has met these conditions, it may authorize the rejection of the collective bargaining agreement.

Q: What happens to our IAM National Pension Plan benefits in bankruptcy?

A: The IAM National Pension Plan is a multi-employer defined benefit pension plan, unlike the previously terminated Aloha-sponsored plans. Vested benefits will not be affected by the bankruptcy filing. As long as your current contractual provisions remain in effect, Aloha must continue making pension contributions on your behalf.

Q: Are our Defined Contribution Pension Plans (e.g 401-k plans) affected by bankruptcy?

A: The filing of a bankruptcy petition typically does not have an immediate effect on a defined contribution pension plan. Assets in the defined contribution plans are separate from Aloha Airlines, and would not be “up for grabs” in bankruptcy proceedings. What is in your account today will remain. The company is prohibited by law from taking funds out of the defined contribution pension plans to meet other obligations or to pay its debts. Furthermore, employer contributions to the plans are treated as normal administrative expenses after a bankruptcy filing. Such contributions to the plan would not be affected by the filing, but could be affected if changes are made to the collective bargaining agreements.

As part of a restructuring under bankruptcy, the company could elect to terminate the defined contribution pension plans. If this were to occur, prior contributions made by the employee would be protected. Prior, vested contributions made by the employer would also be protected.

Q: Would retiree benefits such as medical and life insurance be affected?

A: Just as with pension benefits, a bankruptcy filing does not have an immediate or automatic impact on medical and life insurance benefits for retirees. Unfortunately, because retiree medical and life insurance benefits are not vested benefits in the same sense as pension benefits, they are more vulnerable during a bankruptcy. However, Section 1114 of the bankruptcy code says that a company may not modify retiree benefits unless the retirees’ representative (the IAM) agrees to such modification or unless the court specifically authorizes modification. Like the requirements that must be met to modify collective bargaining agreements, Section 1114 sets certain procedures to obtain permanent modifications to retirement benefits.