Aloha collapse a harbinger of more to come?

By Ben Mutzabaugh

At least one finanical blog –- 24/7 Wall St. –- seems to be asking that question. It runs a post under a headline wondering if Aloha's shutdown is the equivalent to "a canary in the coal mine." The blog notes that while Aloha was small and focused on Hawaii, "the reasons for its demise still had to do with falling ticket prices forced down by competition and (rising) fuel prices." 24/7 says "it is no coincidence that carriers like (American), Delta and Northwest are near their 52-week lows (in share values). Someone, somewhere thinks that one or more of these airlines won't make it, at least in its current incarnation," 24/7 writes.

Perhaps highlighting just how precarious conditions are in the airline industry, The Honolulu Advertiser writes "the speed with which Aloha Airlines shut its passenger business has surprised many, but not those familiar with the airline's bankruptcy case." The paper says no lenders were willing to put up money to help keep Aloha's passenger service going. "I'm not blaming the lender," one unidentified bankruptcy attorney involved in the case tells the Advertiser. "It was a business decision. They didn't want to keep losing money, either."

The paper adds "a tight credit market nationally added to Aloha's woes, making it difficult to find new lenders willing to risk their money in a slowing economy and a bare-knuckles interisland fare ware, several people said." Another unnamed attorney says: "In this credit market, no one else is crazy enough to lend."


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