Reorganization Comes Two Years After Exiting Bankruptcy

Following its announcement of intent to file Chapter 11 bankruptcy last week, representatives with Aloha Airlines tell ANN the carrier received US Bankruptcy Court approval on March 21 to continue operating as usual throughout the reorganization.

Aloha has been authorized to honor all existing reservations, take new bookings, and operate all its flights, air cargo business and ground-handling services for other airlines.

The carriers' loyalty programs, including AlohaPass, Alii Membership and E-Plus, and the AirAwards credit card, will continue to offer the same benefits to customers.

"We are grateful to the Bankruptcy Court for enabling us to move ahead and continue all operations as usual while Aloha seeks additional investors and new opportunities," said David A. Banmiller, president and chief executive officer. "All of us at Aloha want to thank our loyal customers, business partners, and the entire community for their unwavering support while we get through these challenging times."

Aloha's current financial woes are a far cry from Banmiller's February 2006 proclamation his airline had been "reborn," after its last exit from Chapter 11. The airline was able to exit bankruptcy that time only after fierce cost cuts, including two rounds of employee concessions that will help the airline save $75 million annually.

The carrier also received considerable help from investment group The Yucaipa Companies, which assumed financial responsibility for Aloha in September 2005.

Aloha reentered solvency then as a much leaner entity, just as the domestic airline industry was experiencing a resurgence following years of economic turmoil. Since then, however, domestic carriers are being hit once again by high fuel prices, and economic uncertainty.

Aloha and rival Hawaiian Airlines also have upstart go! Airlines to contend with on interisland routes. That carrier, a subsidiary of Mesa Air Group, offers cut-rate fares on competing routes... a practice Aloha says is "illegal."

That scenario paints a gloomy picture for the future of the airline... and rumor has it Aloha is positioning itself for a buyout this time around. Stay tuned.

FMI: www.alohaairlines.com