Bankruptcy Judge Won't Halt Aloha Air's Shutdown

David Banmiller
David Banmiller
Governor Linda Lingle
Governor Linda Lingle

HONOLULU (KHNL) -- The head of embattled Aloha Airlines spoke out after an emotional hearing at US Bankruptcy Court Monday.

The day started with Governor Lingle unveiling the state's last-ditch effort to save Aloha's passenger service. But late Monday afternoon, US Bankruptcy judge Lloyd King said he would not step in and block the shutdown, calling it a business decision.

The company's attorney told the court Aloha's current cash position is $1.7 million, but the average cost of operating the business, including the passenger division, is $1.5 million each day.

The carrier is seeking approval to sell its profitable cargo division, but says it exhausted every realistic financial option for its passenger service.

David Banmiller, Aloha's president and CEO, says the decision to shut down was a painful one.

"For any suggestion that we prematurely shut down, I would ask those with frustration, including yours truly who has loved this job for three-and-a-half years and grown to respect, enjoy and care for the employees, I am the last guy here that wants this to happen," Banmiller said. "I also happen to be the one guy who's legally responsible to make the right decision, even if it's a tough one."

The carrier blames rising jet fuel costs and unfair competition for driving it out of business.

"If I operated for another week and wasn't able to make payroll, I would be enormously criticized for flying airplanes that way."

Even the state's top official says she was caught off guard by the company's sudden announcement.

"I had no indication from Aloha that they were going to come out and say we're closing down," Linda Lingle, Governor (R), said.

In documents filed Sunday night, the state asks the US Bankruptcy Court to block the shutdown until five points are addressed.

First, the Governor wants to make sure Aloha has indeed exhausted all possibilities of finding a buyer or additional financing. Second, she wants the carrier to clearly show it lacks the resources to continue operations for at least another month.

"No one yet has seen their financials," she said. "Everyone is operating on what they say the situation is."

The Governor wants a trustee-appointed committee to be allowed to issue its recommendations first. She also says Aloha must show it's meeting a state law that requires 60 days notice be given to employees, and that it filed Chapter 11 in good faith.

The goal, she says, is to buy more time for the airlines' workers.

"People will continue to be flown between the islands," Lingle said. "I don't think there will be a major long-term dislocation there."

The state says the federal government is objecting to the carrier's attempts to sell its cargo operations.

"That creates a whole new paradigm for this case because everything Aloha has done up to now has been predicated on them selling off at least the cargo piece," Lingle said.

But the state's efforts appear to be moot at this point. Judge King told the courtroom crowd, which included Aloha employees, it's not his place to accept or reject the shutdown plan.