Aloha Airlines filed for Chapter 11 bankruptcy protection Thursday, citing an inability to generate sufficient revenue from interisland service due to "predatory pricing" by Mesa Air Group's Go Airlines subsidiary.
Aloha said it was forced to match Go's below-cost fares at a time when the airline industry was facing unprecedented increases in the cost of jet fuel. Late last week, crude oil rose to an all-time record high of $111 a barrel, and that meant an annual increase of $71 million in fuel expenses for Aloha, said the airline.
"It is a travesty and a tragedy that the illegal actions of a competitor and other factors completely beyond our control have forced us to take this action," said David Banmiller, Aloha's president and CEO. "Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha, and to continue to earn the support of our loyal customers, business partners, vendors and financial backers.
The bankruptcy filing lists some 1,200 creditors and identified the Transportation Security Administration as the largest unsecured creditor, with an outstanding debt of $7.5 million. United is the second-largest at $5.5 million. Pending court approval, the carrier said it has arranged interim financing with General Motors Acceptance Corporation to continue operating and honoring existing reservations.
This is the airline's second bankruptcy filing this decade. Aloha filed Chapter 11 in December 2004 and emerged from bankruptcy protection in February 2006 after securing new labor contracts and capital from new investors.