Aloha Airlines Inc. won court approval to pay $5.5 million to settle claims it failed to protect employee pension plans invested in its own stock.

The deal, approved Monday by U.S. Bankruptcy Judge Lloyd King, resolves U.S. Labor Department allegations that the defunct carrier didn't properly guard the plans' $10 million investment in Aloha's stock as it lost value.

Almost $4 million of the settlement, involving stock purchased in 2000, will go to the pension fund for International Association of Machinists, according to court papers. The deal also resolves claims by the Pension Benefit Guaranty Corp., a quasi- government corporation created by Congress to protect pension programs of bankrupt companies.

Aloha shut down on March 31, 2008, after filing for bankruptcy for the second time 11 days earlier. The company blamed its collapse on rising fuel costs and a passenger-fare price war triggered by Mesa Air Group Inc.'s competing airline. The reorganization case was later converted to Chapter 7 liquidation.