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Aloha Airlines Files For Bankruptcy, Again

Aloha Airlines filed for Chapter 11 bankruptcy protection Thursday, a little more than two years after emerging from bankruptcy.

Aloha said it will continue to fly as long as a bankruptcy court accepts the airline's financial plan to keep operating.

The airline said in its filing that it was unable to generate sufficient revenue due to what it called "predatory pricing" by Mesa Air Group Inc.'s go! airline.

Aloha Airgroup Inc. emerged from bankruptcy protection in February 2006, just 14 months after filing under Chapter 11.

Phoenix-based Mesa Air Group launched go! into the inter-Hawaiian island market later in 2006 to compete with Aloha, as well as Hawaiian Airlines Inc.

In January, go! reported a $20 million operating loss in its first 16 months of operations. Meanwhile, Aloha and Hawaiian reported combined losses of nearly $65 million since go! began operating.

Aloha said it was forced to match go!'s below-cost fares at a time when the airline industry was facing unprecedented increases in the cost of jet fuel.

"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," said David A. Banmiller, Aloha's president and chief executive officer.

A call seeking comment from Mesa Air Group was not immediately returned.

In October, a U.S. bankruptcy judge ordered Mesa to pay Hawaiian Airlines $80 million for using confidential information it obtained from Hawaiian's own bankruptcy proceedings to launch go!. Mesa is appealing the ruling. Hawaiian emerged from bankruptcy in June 2005.

Aloha said it will ask a bankruptcy court to approve a financing arrangement with General Motors Acceptance Corp. that will allow the privately held airline to continue operating.

"Through this filing, we hope to achieve a successful outcome that will protect the jobs of 3,500 dedicated employees who have made extraordinary sacrifices for Aloha, and to continue to earn the support of our loyal customers, business partners, vendors and financial backers."

Mark Dunkerley, president and CEO of Hawaiian Airlines, said Aloha's bankruptcy filing reflects the difficult operating environment in Hawaii's airline industry.

"It is extremely challenging and marked by high operating costs, record high fuel prices and a very competitive pricing structure," Dunkerley said.

Gov. Linda Lingle said she was concerned over the future of Aloha's employees in the wake of the airline's bankruptcy filing.

"I am hopeful that this action will allow Aloha Airlines to successfully emerge from reorganization as they have done in the past," she said. "The continued, uninterrupted service of the airline is in the best interest of the employees, Hawaii residents and visitors and our state's economy."

Aloha operates a fleet of 26 Boeing 737s to serve five Hawaiian airports and six mainland U.S. destinations.

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