For the second time in three years Aloha Airlines is seeking Chapter 11 bankruptcy protection, citing rising fuel costs and predatory pricing by competitor go! Airlines. The company, which filed a voluntary petition in U.S. Bankruptcy Court yesterday, hopes to
For the second time in three years Aloha Airlines is seeking Chapter 11 bankruptcy protection, citing rising fuel costs and predatory pricing by competitor go! Airlines.
The company, which filed a voluntary petition in U.S. Bankruptcy Court yesterday, hopes to obtain approval to continue operating in order to protect 3,500 jobs, honor travel reservations, and prevent disruption of its mail, cargo and ground-handling services.
Aloha, the state’s No. 2 airline with 61 years of service in the Hawaiian Islands, has asked the court to allow its principal lender, General Motors Acceptance Corp., to finance its current operations.
In the filing, Aloha said it is unable to make enough money from interisland flights due to record-high fuel expenses and predatory pricing by go!, a subsidiary of Mesa Air Group.
The competitor entered the Hawai‘i market in 2006 with tickets starting at $39, and last year offered discounted one-way fares as low as $1.
Aloha claims it was forced to match go!’s below-cost fares just as the industry was facing unprecedented increases in the cost of jet fuel.
“It is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control have forced us to take this action,” David A. Banmiller, Aloha’s president and chief executive officer, said.
In January, go! reported a $20 million operating loss in its first 16 months of operation. Meanwhile, Aloha and Hawaiian Airlines have reported combined losses of nearly $65 million since go!’s inception.
Mesa Air Group CEO Jonathan Ornstein did not immediately return calls for comment.
Both Aloha and Hawaiian, which emerged from bankruptcy in June 2005, sued Mesa in 2006, alleging it misused confidential financial information to gain an advantage.
Hawaiian won its lawsuit last October and was awarded $80 million in damages. Aloha’s case is still pending.
Hawaiian Airlines President and CEO Mark Dunkerley responded to the news with optimism for the state’s No. 1 carrier despite a struggling Hawai‘i market.
“The action taken by Aloha Airlines today reflects the difficult operating environment in Hawai‘i’s airline industry. It is extremely challenging and marked by high operating costs, record high fuel prices and a very competitive pricing structure,” Dunkerley said. “Fortunately at Hawaiian Airlines we have made many tough operating decisions in the past year and customers have responded positively. We know the local airline industry will continue to change, and I’m confident that our employees are up to the challenge.”
Gov. Linda Lingle also spoke out yesterday, expressing concern for the company’s staff.
“I am hopeful that this action will allow Aloha Airlines to successfully emerge from reorganization as they have done in the past,” she said. “The continued, uninterrupted service of the airline is in the best interest of the employees, Hawai‘i residents and visitors and our state’s economy.”
Lingle said her office will continue to monitor the situation and any potential impacts resulting from Aloha’s filing.
• Gregg Small, Associated Press writer, contributed to this report.
