Aloha Files for Chapter 11

Aloha Files for Chapter 11

Aloha Airlines vowed to continue “business as usual” in spite of the Chapter 11 filing by the airline and parent company Aloha Air Group Dec. 30. That will include the continuation of the airline’s full schedule, frequent flyer program and alliance and interline agreements. Reservations, ticketing and refunds also will continue as normal.

“It will be business as usual as we move forward to complete the restructuring of our company,” said David Banmiller, Aloha’s president and CEO, on the day of the filing.

In seeking bankruptcy protection for its restructuring, the company struck deals for debtor-in-possession loans of $2 million from Aloha Securities and $1 million from The Ing Family Partnership.

Aloha blamed part of its problems on high fuel costs, which resulted in a $24 million or 48% year-over-year increase in fuel expenses through November, as well as fare-lowering competition on transpacific routes from mainland carriers.

Aloha is the state’s largest provider of inter-island air services, with about 620 flights per week between Honolulu; Kahului, Maui; Kona and Hilo, Hawaii; and Lihue, Kauai, and it also operates about 140 transpacific flights a week.

Aloha’s filing means that, for the time being, Hawaii has two airlines in Chapter 11: Hawaiian Airlines filed for bankruptcy protection in March 2003. Hawaiian, however, is expected to emerge from Chapter 11 as soon as this month.

After the Sept. 11 attacks, Aloha received a $40.5 million federal loan guarantee from the ATSB. The airline used the guarantee to obtain a $45 million loan in late 2002 and said, to date, has paid back about half.