Aloha airlines files for bankruptcy

Aloha Airgroup Inc., the closely held Hawaiian airline company, has filed for Chapter 11 bankruptcy protection, saying competition from Mesa Air Group Inc. cut its sales.

This is the second bankruptcy in three years for Aloha, the second-largest Hawaii-based airline. Aloha, which filed late Thursday, is seeking court approval for financing from its main lender, General Motors Acceptance Corp., so that it can keep operating

“We hope to get court approval today to carry on all flights, frequent-flier programs, etc.,” said Aloha spokesman Stu Glauberman, who reported “beaucoup bookings” for the busy Easter and spring season.

Aloha and Hawaiian Airlines, the state’s biggest carrier, have cut prices since Mesa Air’s Go! subsidiary entered the local market in June 2006 with one-way inter-island fares for as little as $1. Aloha and Hawaiian have both sued Mesa Air.

“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,” David Banmiller, Aloha’s chief executive officer, said in the statement.

Mesa Air Chief Executive Jonathan Ornstein declined to comment, citing pending litigation.

On Oct. 20, a federal bankruptcy judge in Honolulu awarded Hawaiian Airlines $86.9 million in damages, costs and legal fees in a case involving Mesa’s alleged misuse of Hawaiian’s financial information.

In 2006, Aloha filed a lawsuit against Mesa, saying Mesa obtained confidential information about Aloha when it considered buying the airline. A hearing is set for October.

Aloha, which has 3,500 employees, last entered bankruptcy in December 2004 and emerged a year later after lining up new financing and new agreements with its employee unions.

“The action taken by Aloha Airlines today reflects the difficult operating environment in Hawaii’s airline industry,” Mark Dunkerley, Hawaiian Airlines’ chief executive, said after the bankruptcy announcement.