Aloha Airlines shuts down its air cargo unit

From the Hon­olulu Adver­tiser and the Hon­olulu Star-Bulletin: Aloha Air­lines shut down its air cargo unit yes­ter­day. Aloha car­ried 85 per­cent of the state’s air cargo. I men­tioned that this might hap­pen in my billso.com arti­cles of 2 April 2008 and 8 April 2008. Aloha’s pas­sen­ger busi­ness shut down last month, as I dis­cussed in this billso.com arti­cle on 30 March 2008.

Hawaii con­sumers will start felling the pinch shortly, espe­cially on the neigh­bor islands. Love’s Bak­ery had to ship 22,000 pounds of bread and other prod­ucts to Kauai and the island of Hawaii through Los Ange­les. Per­haps their Maui ship­ments used the Super­ferry, which can han­dle cargo? Kauai res­i­dents who helped stop the Super­ferry last August may come to regret their deci­sion in the next few days.

Other ship­pers were turned away at Aloha offices when they tried to drop off fruit and leis. That’s very bad news, as Lei Day is com­ing on 1 May, and neigh­bor island busi­nesses planned to ship sev­eral thou­sand leis to Oahu for the event. One large florist had already made con­tin­gency plans to ship with United Air­lines, but other busi­nesses hadn’t thought ahead.

The value chain

Aloha’s cargo shut­down forces many time-sensitive ship­pers to find alter­nate means of sup­port­ing their value chain. News­pa­pers, auto parts and pre­scrip­tion drug ship­ments to the neigh­bor islands will also be affected. This Hon­olulu Adver­tiser arti­cle has more details.

The US Postal Ser­vice has made arrange­ments with Cor­po­rate Air to ship inter­is­land mail, but there may be delays.

The Advertiser’s lead arti­cle describes how Saltchuk Resources, the Seattle-based hold­ing com­pany that owns Young Brothers/Hawaiian Tug & Barge had signed a let­ter of intent to pur­chase Aloha’s air cargo busi­ness for $13 mil­lion on 27 March. Another com­pany, bid Jupiter Hold­ings Group bid $13.65 million.

Now the auc­tion process may have to start again, and 400 Aloha employ­ees have been laid off.

James Wag­ner, Jupiter’s attor­ney, said the com­pany was pre­pared to go through with its pur­chase as recently as yes­ter­day after­noon. But GMAC unex­pect­edly upped the price to $15 mil­lion and required a higher deposit, he said

Saltchuk, mean­while, pulled its bid last week after Aloha and GMAC changed the terms of the bidding.

“This all has to do with other par­ties chang­ing the deal with­out any warn­ing,” Wag­ner said. “I’ve been in prac­tice over 30 years and I’ve never seen a case end like this.

Related arti­cles on billso.com

• 30 April 2008: Will Aloha Air­lines’ con­tract ser­vices unit shut down?

Tagged as: airline, Aloha, California, cargo, Kauai, los-angeles, Maui, superferry, value-chain