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The Honolulu Advertiser
Posted on: Wednesday, April 29, 2009

Mesa's bid for Aloha name still on hold

By Rick Daysog
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

Lloyd King

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Efforts to rebrand go! airline as Aloha Airlines remained in a holding pattern as a federal judge raised questions about the conduct of go!'s parent company.

In a hearing yesterday, U.S. Bankruptcy Judge Lloyd King put off any decision on how and when the sale of Aloha's intellectual property will be held, saying he plans to issue a written opinion.

But King raised the possibility that go's parent, Phoenix-based Mesa Air Group, could be barred from using the defunct carrier's trade name.

He cited an e-mail uncovered in a separate bankruptcy lawsuit in which a Mesa executive proposed driving Aloha out of business.

"This gets to the issue of past conduct of a prospective purchaser," King said. "Can it be sufficient to disqualify the buyout of Aloha Airlines' intellectual property?"

Once the state's No. 2 carrier, Aloha shut down on March 31, 2008, due to soaring fuel prices and a costly fare war initiated by go!'s June 2006 start-up.

Aloha's former owner, Yucaipa Co. of California, is attempting to buy Aloha's trade name so that it can license the name to Mesa for a minimum of $6 million over 10 years.

The licensing deal is part of a settlement of an antitrust lawsuit in which Aloha alleged that Mesa attempted to drive Aloha out of business.

In March, King invalidated a similar sale of Aloha's intellectual properties to Yucaipa after attorneys for court-appointed trustee Dane Field barred an Advertiser reporter and a representative of the machinists union from attending a court-sanctioned auction.

Former Aloha Airlines employees, who blame Mesa for Aloha's demise, opposed the sale of the Aloha name to Mesa.

Robert Klyman, attorney for Yucaipa, said yesterday that disqualifying Mesa will only hurt Yucaipa, which had invested $100 million to keep Aloha flying.

He said allegations about Mesa's role in Aloha's demise were "unproven."

"No court has made a determination that Mesa has been a good or bad actor," Klyman said.

During yesterday's hearing, King referred to a Mesa e-mail uncovered during the Hawaiian Airlines lawsuit against Mesa in which former Mesa Chief Financial Officer Peter Murnane discussed giving bankrupt Aloha Airlines a final push to drive it out of business.

While the e-mail was uncovered in a separate case, lawyers familiar with the Aloha bankruptcy said that King has the discretion to consider the e-mail in his ruling on the matter.

Mesa previously has said that Murnane's e-mail was taken out of context. Mesa settled the lawsuit by paying Hawaiian $52.5 million.

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.