Hawaii

HONOLULU — Aloha Airlines informed a bankruptcy judge that the company is unable to sell its cargo division and must shut down operations at the end of business Monday.

The announcement came during a hearing to decide whether Aloha pilots could go on strike over a contract dispute.

Aloha attorneys said two companies that were interested in buying the cargo division pulled out within two hours of each other on Monday afternoon. When that happened, Aloha’s primary lender, GMAC, said it was unwilling to continue financing operations.

Aloha bankruptcy attorney Paul Singerman said he had “tremendous regret for the circumstances.”

The shutdown means the end for about 1,000 employees.

The end of Aloha cargo will make a major impact on Hawaii’s economy. Aloha cargo made up for 85 percent of the interisland air cargo business. The airline had a major contract with the U.S. Postal Service, produce dealers and bakeries.

The pullout of the two potential buyers has left the company “no alternative” but to shift from Chapter 11 bankruptcy to Chapter 7 bankruptcy liquidation. Officials said the company will begin selling off its assets.

Judge Lloyd King expressed concern about the next steps for the company.

“We have a lot of people being left in the air,” King said.

Singerman said the company hopes that a trustee can be appointed quickly for the chance to possibly get interim financing.

The judge said the latest developments will not affect the sale of Aloha’s Contract Services Division to Pacific Air Cargo for $2.2 million. The unit employs about 1,100 people locally.

Previous Stories:

• April 28, 2008: Aloha Pilots To Learn Strike Fate
• April 26, 2008: Aloha Pilots Hold Strike Until Monday Hearing
• April 24, 2008: Judge Approves Part Of Aloha Air Sale
• April 22, 2008: Aloha Cargo Auction Delayed
• April 21, 2008: No Winner For Aloha Air Auction Of Cargo Division
• April 18, 2008: Remaining Aloha Pilots Threaten To Strike
• April 1, 2008: Aloha Asks Judge To Force Cargo Pilots To Work
• April 1, 2008: State Holds Meetings For Laid Off Aloha Employees
• April 1, 2008: Employees Greet Last Aloha Flight
• March 31, 2008: Judge Allows Aloha To End Operations

This entry was posted on Tuesday, April 29th, 2008 at 5:51 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.