Aloha Airlines' parent files for bankruptcy

/ Source: The Associated Press

The parent company of Aloha Airlines filed for Chapter 11 bankruptcy protection less than a month after announcing it would lay off a dozen top managers and freeze 35 open management jobs because of rising fuel costs.

David A. Banmiller, who took over on Nov. 14 as president and chief executive of Honolulu-based Aloha Airgroup Inc., said the intent was to help bring costs in line with competitors who already have filed for bankruptcy protection.

He cited higher operating costs such as fuel prices and the need to renegotiate aircraft leases as the primary factor in the decision to file.

"We need to get our lease rates — which is one of our largest expenses — consistent with the marketplace," he said.

Banmiller gave no timetable for when the company expects to emerge from bankruptcy, but said reservations for future travel will be taken, tickets will be honored, and flights will operate as scheduled. He declined to predict whether any jobs would be cut among Aloha's 3,668 employees.

"We will reevaluate our staffing levels and I cannot guarantee that there will be no layoffs," he said. "Unfortunately, this is an airline and the airline industry in general is in life support."

privately held Aloha is now the fifth U.S. commercial carrier operating under Chapter 11.

Aloha's filing comes as its local rival, Hawaiian Airlines, is expected to emerge from Chapter 11 protection.

Hawaiian filed for bankruptcy in March 2003, citing increased operating costs stemming from the 2001 terrorist attacks and the inability to renegotiate aircraft leases. Investor groups that submitted various reorganization proposals are trying to formulate a single plan to present to a U.S. Bankruptcy Court for approval at a Jan. 25 hearing.

Aloha Airlines, which operates a fleet of 27 Boeing 737 aircraft, recently reported a $6 million loss for the third quarter, its fourth quarterly loss in a row. The company has forecast 2004 earnings of $452.3 million.

Besides the management cuts and job freezes, Aloha this month also announced plans to cut its twice-weekly flights to American Samoa and to the Marshall Islands next month. The carrier would still operate interisland routes and flights to California, Nevada and Vancouver, British Columbia.

The bankruptcies of Hawaii's two main carriers comes after a proposed merger fell apart in 2002.