Aloha Airlines Begins Bankruptcy Proceedings - Hawaii News Now - KGMB and KHNL

Aloha Airlines Begins Bankruptcy Proceedings

By Leland Kim and Mari-Ela David

DOWNTOWN HONOLULU (KHNL) --  Hawaii's inter-island airfare has claimed its latest casualty: Aloha Airlines.  Representatives for the 61-year-old local carrier appear in bankruptcy court Friday, the second time in just over two years.  They point the finger at go! Airlines and its parent company Mesa Air Group.

Friday morning, U.S. bankruptcy judge Lloyd King granted motions that'll keep Aloha running in the short term, but the company's long term future is still not clear.

"This is actually what we were afraid of, that Mesa's plan of pricing tickets below cost to put a competitor out of business would come to fruition and now it has," said Randall Cummings, an Aloha Airlines pilot.

Lawyers for Aloha say, Mesa's "irrational and unlawful predatory pricing" was designed to "destroy existing carriers," specifically Aloha.

Mesa CEO Jonathan Ornstein would not respond to these allegations, citing pending litigation.

Aloha says fuel cost is another major factor.  Record crude oil prices mean jet fuel is more expensive.

It went up $71 million annually for Aloha, but the airline says that's a lesser issue.

"Fuel cost can be passed on as we've seen other airlines on the mainland are adding on surcharges for fuel," said Cummings.  "But when go! is coming here selling tickets at irrational cost basis at $9, $29, $49, I mean it's $15 below their ticket cost.  That is clearly the biggest catalyst in our presence here today, in Aloha's presence here today."

Cummings says Aloha employees have done what they could to keep the company afloat.

"We gave a 20 percent pay cut," he said. "We're here for the company. We really want the company to survive."

The sale of the company, as a whole or in pieces, could be one outcome from Friday's proceedings.

"I don't think it was a secret that they wanted to sell Aloha even prior to declaring bankruptcy," said Cummings. "We just hope it's somebody with a strong financial situation."

Now Aloha's 3,500 employees fasten their seatbelts, and take a wait and see approach to what the future holds for their jobs, and their company.

The bankruptcy court proceedings wrapped up late Friday afternoon.  Judge King pretty much granted every motion, which means Aloha stays in business until at least the end of the month.

Aloha Airlines President and CEO David Banmiller says he is optimistic his company will get through this, that there's no need for employees and travelers to worry.  He calls Friday's court decision a success.

Judge King's order allows Aloha to arrange cash collateral financing with its lenders, so it can continue to pay for operating costs.

"These are challenging times in this industry," said Banmiller. "It's not just us folks. It is the industry in general and as a sidebar, we sometimes get trouble about where we are headed as an industry and as a country as it relates to the cost of fuel."

Banmiller says they are in talks with potential investors, which he says is a very positive situation for Aloha Airlines in terms of long-term financial survival.

For members of loyalty programs such as aloha pass, the airline says it will continue to offer those benefits to customers.

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