Another airline falls. Carl Gutierrez in Forbes:
High fuel prices and intense competition has led the airline industry to push for consolidation. Unfortunately Hawaii's Aloha Airlines wasn't able to hold on long enough. On Sunday, the Honolulu-based airline said it would halt all passenger service after Monday, effectively bringing a close to a business that's been running since 1946.
"We simply ran out of time to find a qualified buyer or secure continued financing for our passenger business," said Aloha President David Banmiller. "We had no choice but to take this action." Hawaii's second-largest carrier has operated a fleet of 26 Boeing 737s to serve five airports in Hawaii and six destinations in the continental United States.
In educational interest, article(s) quoted from extensively.
Rob Perez in yesterday's USA Today:
Less than two weeks after filing for Chapter 11 bankruptcy protection, Aloha announced yesterday that it plans to halt passenger service with its last flight tonight. It will continue operating its cargo and charter operations. ...
Even before filing for bankruptcy protection March 20, Aloha had been shopping its overall business and just the passenger operation to other airlines and investor groups. Aloha came close more than once to striking a deal...those potential deals collapsed. ....While Aloha was searching for buyers, its lenders were pressuring the airline to stop selling tickets to passengers, taking the position that such sales would further expose the lenders to more potential losses, the person said. ...
An indication of how quickly Aloha is bleeding financially came in a court filing yesterday. The airline said its unrestricted cash had dwindled from $3.8 million on March 20 to $900,000 as of yesterday. ...Aloha cited the soaring cost of fuel and an interisland fare war, trigged by the entrance of go! airlines, when it filed for bankruptcy protection, a move that was meant to buy the company time while it restructured.
With no substantive offers for its passenger business, Aloha officials decided to stop the bleeding by shutting that operation, people familiar with the case said. A tight credit market nationally added to Aloha's woes, making it difficult to find new lenders willing to risk their money in a slowing economy and a bare-knuckles interisland fare ware, several people said.
"In this credit market, no one else is crazy enough to lend," said one attorney.
Marc McSherry for Reuters:
In its bankruptcy filing, Aloha said it was unable to generate enough revenue from its inter-island passenger business because of go!'s pricing. Aloha said it was forced to match go!'s "below-cost fares" at a time when the airline industry is facing unprecedented increases in the cost of jet fuel.
On Monday, Mesa said go! would increase the number of daily flights it operates from an average of 54 to 94, beginning on Tuesday. Mesa said go! would operate between 11 and 13 round trips a day from Honolulu to Maui, Lihue, Hilo and Kona, offering all seats at $49 through April 7.
The fuel price spike, coupled with a steadily weakening U.S. economy, has stalled the airline industry's modest recovery from the 2001-2006 downturn. Oil prices, which are directly related to jet fuel costs, remain above $100 a barrel. Big airlines are beginning to shrink to cope with much tougher operating conditions. On March 18, Delta Air Lines Inc unveiled plans to cut 2,000 jobs and scale back flights.
The previous downturn in the airline industry resulted in bankruptcies and unprecedented out-of-court restructurings.
Aloha Airlines announcement:
Aloha Airlines announced today that it will be shutting down its inter-island and transpacific passenger flight operations. Aloha’s last day of operations will be Monday, March 31, 2008. On that day, Aloha will operate its schedule with the exception of flights from Hawaii to the West Coast and flights from Orange County to Reno and Sacramento, and Oakland to Las Vegas. Code-share partner United Airlines and other airlines are prepared to assist and accommodate Aloha’s passengers who have been inconvenienced. ...
The shutdown of Aloha’s passenger operations will affect about 1,900 employees. Aloha also announced that its air cargo and aviation services units will continue to operate as usual while the U.S. Bankruptcy Court seeks bids from potential buyers. On March 27, 2008, Saltchuk Resources, Inc., announced its intention to buy Aloha’s air cargo business.
“"This is an incredibly dark day for Hawaii,”" said David A. Banmiller, Aloha'’s president and chief executive officer. "“Despite the groundswell of support from the community and our elected officials, we simply ran out of time to find a qualified buyer or secure continued financing for our passenger business. We had no choice but to take this action."
“We deeply regret the impact this will have on our dedicated employees who have made Aloha one of the best operating airlines in the country. “Aloha Airlines was founded in 1946 to give Hawaii’s people a choice in inter-island air transportation.
Employee reaction via KHON-Channel 2:
Employees were stunned to hear the news.
“Right now everyone is just in a state of shock…we don't know what happens after today. All you can do is support each and everyone of us. There is over 3500 of us. We are not just co-workers, we're family,” Aloha Airlines flight attendant Kanani Kaopua said. For Kaopua flying for aloha wasn't just a job, it was an opportunity to support her education.
“This job enabled me to go to school and work you know and I have enough seniority where I could get the days off for school now, but all of that is so miniscule when you look at the big picture of what's going on,” Kaopua said.
More employee reaction via KITV:
At the Aloha Airlines check-in counter employees put on a brave face, trying to do their work without showing too much emotion. However, when you talked to them about the shutdown the emotions came out.
"My heart is really, really heavy this is my family. I've been here for 30 years. I had two babies -- married. This is my family. It's going to be really hard to work today, but we've got to take care of our passengers that are still flying," counter employee Chris Opiopio said. While workers did take care of the passengers they also took a few moments to shed a few tears and try to console each other.
Nicole Fong just spent six months training to begin a career at Aloha Airlines.
"I worked really had to pass probation to start a career here and it's devastating to know it's coming to and end just when I'm starting," Fong said. She said her heart goes out to longtime employees. "This is their life. This is their living. What are they supposed to do now?" she said.
Employees were told their sick leave and vacation is gone. Their health coverage is also ending. The company said their pensions and 401Ks are secure.
"I been 35 years with aloha airlines and, you know, it's like 85 percent of my life is working here. It's very sad to see that it goes," said Joe Kauweloa who worked for Aloha for 35 years.
Prior to the announcement, flight attendants Na'i McCarthy & John Baker representing Save Aloha Airlines were interviewed on KHON:
In related news, Gita Sitaramiah reports in the Pioneer Press:
Faced with rising costs and more competition, charter flight operator Champion Air announced today that it will cease operations May 31. The Bloomington-based airline's 550 employees will continue to receive their pay and benefits through that date.
"Unfortunately, our business model is no longer viable in a world of $110 oil, a struggling economy and rapidly changing demand for our services," said Lee Steele, Champion's president and chief executive. "Those factors also have impeded our efforts to attract new capital and new investors."
The charter airline flies Boeing 727 aircraft, which have three engines and are less fuel efficient. The airline also has faced more competition as scheduled airlines, including Northwest Airlines, offer more package deals.
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