Aloha Airlines Files Chapter 11

Aloha Airlines Files Chapter 11

The parent company of Aloha Airlines has filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy. The move is not expected to affect service.

The airline, one of Hawaii’s two majors, wants to reduce its 2005 operating expenses by $60 million – about 15 percent of the company’s total operating expenses.

Aloha in December 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.

In announcing the airline’s restructuring, President and CEO David A. Banmiller emphasized that AlohaPass members will still be able to earn and redeem mileage and Aloha will continue to offer frequent flyers the option of earning United Mileage Plus miles on Aloha flights. Transactions made with the Aloha AirAwards Card will continue to earn bonus miles.

Aloha joins United, US Airways, ATA Airlines, and Hawaiian Airlines in Chapter 11 reorganization.

Whether all five will successfully exit Chapter 11 by next year depends on economic growth, lower fuel costs and additional givebacks in labor contracts.

From 2001 through 2003, the airline industry collectively lost $23.2 billion. When all is said and done, 2004’s losses are expected to total about $8 billion. Industry-wide, losses will moderate in 2005, hovering between $2 billion and $4 billion, John Heimlich, chief economist for the Air Transport Association, told the Chicago Tribune.

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