Put it on Aloha's tab

HONOLULU -- The shutdown of Aloha Airlines is benefiting one sector of the economy: bankruptcy lawyers and their consultants.

Since March, attorneys and experts hired by Aloha have billed the defunct airline nearly $3 million, federal bankruptcy court filings show.

The legal tab is well below the $11 million that Aloha wracked up during its previous bankruptcy, but the amount is expected to increase since the case is still pending.

Employees and retirees say the money would have been spent better if it were used to keep the airline afloat. It also could have been used to pay for health benefits or severance for the 1,900 Aloha employees who lost their jobs when the airline went out of business on March 31, they said.

"It's outrageous to charge such fees when you are just closing the door and turning off the lights," said Steve Brenessel, a retired Aloha pilot.

"All that money could have been better spent by keeping the airline going instead of going into the pockets of lawyers."

Bankruptcy experts say the fees in the Aloha liquidation aren't out of line.

Typically, attorney fees and other costs for small bankruptcies amount to about 10% of the assets, said Lynn LoPucki, a law professor at the University of California-Los Angeles.

Aloha has received about $20 million from the sale of its profitable cargo and contract services unit. It expects to receive another $10 million to $15 million from the sale of its aircraft frames, engines and other aircraft parts.

"This is probably an ordinary fee for this size of a case," said LoPucki.

Founded in 1946, Aloha was the state's second largest airline before shutting down its passenger service on March 31 as a result of soaring fuel prices and a costly intra-Hawaii fare war.

The closure came 11 days after Aloha filed for Chapter 11 bankruptcy reorganization, two years after Aloha emerged from its first bankruptcy.

In Aloha's previous bankruptcy, six law firms or investment banking firms billed more than $1 million while a seventh billed just under that amount.