Aloha shuts down flight operations; state objects

By Caroline Salls

Pittsburgh, March 31 - Aloha Airlines shut down its inter-island and transpacific passenger flight operations, effective March 31, according to a company news release.

According to the release, Aloha has stopped selling tickets for travel beyond March 31, its last day of operations.

Aloha said the shutdown of its passenger operations will affect about 1,900 employees.

The company said code-share partner United Airlines and other airlines were prepared to assist and accommodate Aloha's passengers, and passengers who do not want to be re-accommodated by another airline were instructed to request a refund from their travel agent or credit card company.

Aloha said its air cargo and aviation services units will continue to operate as usual while the U.S. Bankruptcy Court for the District of Hawaii seeks bids from potential buyers.

The company said Saltchuk Resources, Inc. announced its intention to buy Aloha's air cargo business on March 27.

"This is an incredibly dark day for Hawaii," Aloha president and chief executive officer David A. Banmiller said in the release.

"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."

On Sunday, the State of Hawaii filed an objection to the flight operations shutdown, asking the court not to approve the shutdown "unless debtor Aloha Airlines, Inc. has established that it has exhausted all possibilities of finding a buyer for its flight operations or financing to reorganize the airline."

In addition, the state said the shutdown should not be approved unless the airline proves that it does not have enough cash and other resources to continue its operations at least through April and that the company has considered the opinion of its official committee of unsecured creditors.

The state also said the court should decide whether the company and its secured lenders filed Chapter 11 bankruptcy "in good faith" before it approves the shutdown.

Aloha, a Honolulu-based airline, filed for bankruptcy on March 20. Its Chapter 11 case number is 08-00337.

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