Aloha Airlines files for Chapter 11 bankruptcy

[flyNhawaiian767]

Star-Bulletin Staff
[email protected]





The parent of Aloha Airlines today joined its local competitor Hawaiian Airlines — and several carriers across the nation — in filing for Chapter 11 reorganization bankruptcy amid the high cost of jet fuel.



Aloha Airgroup Inc., which recently posted its fourth quarterly loss in a row, filed its petition this afternoon in Honolulu.

Aloha owes $24.1 million to the government’s Air Transportation Stabilization Board, set up to help ailing carriers survive the attacks of Sept. 11, 2001, as well as nearly $21.5 million to First Hawaiian Bank. The company’s total assets and debts were not available. Aloha and Hawaiian announced a merger after 9/11, but the deal fell apart and Hawaiian later filed for Chapter 11 after it could not reach renegotiate its aircraft lease agreements.

 

[Sy-bill]

Wow. De jevu. I feel like I've read this thread before.

 

[Sleepyhead]

Unfortunately there will be more Chapter 11s in '05. The only question is who is next.

 

[Erndogg]

Check out:
http://http://pacific.bizjournals.com/pacific/stories/2004/12/27/daily24.html?jst=b_ln_hl
Aloha Airlines files for bankruptcy

Prabha Natarajan
[font=Times New Roman,Times,Serif]Aloha Airgroup Inc., parent company of Aloha Airlines, filed for voluntary Chapter 11 and reorganization bankruptcy Thursday afternoon.

The airline wants to reduce its 2005 operating expenses by $60 million, which represents about 15 percent of the company's total operating expenses. Through bankruptcy, the company hopes to achieve this by:

• Renegotiating its labor contracts with significant wage concessions;
• Renegotiating aircraft leases;
• Reevaluating its staffing levels;
• Improving productivity through IT initiatives.

Being in bankruptcy gives the airline flexibility in terms of being able to delay aircraft leases for 60 days. The airline hopes to reach agreement with its lessors within that period. Its largest aircraft lessor is G.E. Commercial Aviation Services for its Boeing 737s.

The airline has been in negotiations with its five labor unions since early December, and says it's fairly close to signing a deal with three of them.

It listed 20 unsecured creditors, the top being First Hawaiian Bank with $42.8 million in trade debt.

The Air Transportation Stabilization Board, which gave the company a $45 million loan after the Sept. 11, 2001, terrorist attacks to upgrade systems and expand, is the second highest claimant with $24.1 million.

The third largest debt owed is also with First Hawaiian, on a nearly $13 million line of credit. It also owes the bank $8.5 million for a term loan.

Other debt owed:

• American Express trade debt, $13.3 million.
• ARC trade debt, $12.1 million.
• Milici Valenti Ng Pak, $3.2 million.
• Severance for Aloha's former CEO Glenn Zander, $1.5 million.

The airline has retained Giuliani Advisors to assist in exploring strategic alternatives to maximize value through the Chapter 11 process.

Aloha earlier this month eliminated 12 top managers and froze 35 open management positions. It posted a $6 million loss for the third quarter and has asked its employees for contract concessions, citing increased fuel costs. It also recently ended its expensive service to American Samoa and the Marshall Islands.

Aloha swung to a loss in the third quarter despite higher revenue of $123.5 million, compared to $117.6 million a year before. It paid nearly two-thirds more for jet fuel, which is the second highest cost for an airline, after labor.

"Despite actions already taken to cut unprofitable routes and reduce senior management by 36 percent, Aloha must continue to pursue cost-reduction initiatives necessary to offset higher fuel and operating expenses in what has become a fiercely competitive market environment," said David Banmiller, Aloha president and CEO. "If Aloha is to effectively compete, we must align our aircraft lease rates to market levels and match our expenses to those of competitors who have already benefited from bankruptcy protection."

Because Hawaiian Airlines, United Airlines and ATA went into bankruptcy protection to renegotiate aircraft lease rates, Aloha says it has been prompted to match its competition.

Through November 2004, Aloha says it has paid $24 million for fuel, a 48 percent increase over the previous year. This is the first time the airline has filed for Chapter 11 protection.


[/font]

© 2004 American City Business Journals Inc.

Good luck guys/gals. It looks like Banmiller is going and try doing a Gutbomb on you guys like they have been tring to do on us because of 1. There inability to merge us 2. bad management decisions like expansion during a fuel crisis etc etc...
Good luck in court and hope they dont pull a 1113 on you and dump your good contract!!

 

[Whale Rider]

What a way to ring in the "New Year". An unfortunate state of our industry. It should be an interesting year.

 

[JayhawkDude]

The bottom line

Because Hawaiian Airlines, United Airlines and ATA went into bankruptcy protection to renegotiate aircraft lease rates, Aloha says it has been prompted to match its competition.

Cause and effect- likely others will have to join in.

 

[AQ PILOT]

Yep, lovely way to ring in the New Year. From what I've heard it really has been an ugly year for us. Besides the high costs of doing business, it sounds like our former CEO really mismanaged the airline. They didn't even yell fire until business had already burned itself to the ground!

Thanks to the two HAL guys who posted those BK articles. One of us Aloha guys should have taken the time to do that when HAL started the process way back when.

And just to fire up the rumor mill, about 3 weeks ago a rumor surfaced coming from a somewhat believable source that HAL had been talking to AQ about a merger again. Yeah, this was a third hand account...but still...I'm not going into the New Year without a good rumor floating around!

 

[Freight Dog]

And just to fire up the rumor mill, about 3 weeks ago a rumor surfaced coming from a somewhat believable source that HAL had been talking to AQ about a merger again. Yeah, this was a third hand account...but still...I'm not going into the New Year without a good rumor floating around!

Third time's the charm.....

I doubt it tho... bring back that SWA rumor... i think that sounds a little better than HAL.

 

[Jim]

I'm one furloughed HAL pilot that wishes this had never happened. There is room for both of us in the Hawaii market and neither of us deserves this burden. It's all about bad management and stock holders/owners trying to cash in on the backs of the employees. Let's see a realistic ticket price structure and than there would be none of this $hit.

As a 2+ year furloughee on his second furlough since 9/11 - I hope no Aloha pilot hits the streets. Good luck to all of you.

 

[English]

And just to fire up the rumor mill, about 3 weeks ago a rumor surfaced coming from a somewhat believable source that HAL had been talking to AQ about a merger again. Yeah, this was a third hand account...but still...I'm not going into the New Year without a good rumor floating around!

Just remember...Don Carty used to work with Banmiller at American...do the math.