Aloha's quick demise didn't surprise everyone
HONOLULU -- The speed with which Aloha Airlines shut its passenger business has surprised many, but not those familiar with the airline's bankruptcy case.
Lenders were unwilling to throw more money into the money-losing passenger service part of the operation and no other group was willing to come to the rescue, according to several people familiar with the case.
"I'm not blaming the lender," said one bankruptcy attorney who is involved in the case and didn't want to be identified. "It was a business decision. They didn't want to keep losing money, either."
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.
People familiar with the bankruptcy case said the airline's hand was forced because its existing lenders were unwilling to put more money into passenger operations, no other lenders were interested in filling that void and no airline or investor group was willing to purchase the passenger operation or the entire company.
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, according to one person familiar with the case. But those potential deals collapsed, said the person, who like most people involved with the case was unwilling to speak on the record.
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.
Aloha was under the gun to find a buyer by today, when it returns to bankruptcy court to get a financing arrangement extended, one person said.
"To pull the plug, it wasn't an easy decision," said David Farmer, Aloha's attorney in the bankruptcy case.
