Aloha Airlines shuts down cargo operations


Aloha Airlines said today it is shutting down its interisland cargo operations.

Aloha, which carries 85 percent of all goods by air between the islands, said its lender, GMAC Commercial Finance LLC was unwilling to provide further financing.

Aloha, which shut down its passenger service on March 31 and laid off 1,900 workers, flew an afternoon cargo flight today, but the fate of its nighttime shipments was unclear at this time.

“We don’t have any money,” Paul Singerman, an attorney for Aloha, said during a bankruptcy court hearing today

The move will put 300 of Aloha’s cargo employees out of work. It also could jeopardize the sale of its contract services to Los Angeles-based Pacific Air Cargo. Pacific Air last week agreed to buy the 1,100-employee aviation services unit, which handles baggage duties, ramp duties and other ground services for carriers that serve Hawai’i.

During a bankruptcy court hearing, one of the bidders, Jupiter Holdings Group, said it bid $13.65 million for the cargo operation, but that GMAC and Aloha increased the asking price to $15 million. Jupiter, which continues to stand by the offer, said it was surprised by Aloha’s decision to shut down the cargo operations.

GMAC is owed $44 million by Aloha and had been providing financing to keep the cargo operations flying after it filed for bankruptcy protection on March 20.

U.S. Bankruptcy Judge Lloyd King reluctantly converted Aloha’s bankruptcy reorganization into a bankruptcy liquidation, saying he could not order GMAC to continue to finance Aloha’s cargo operations. As of tonight, Aloha’s will stop cease flying its two cargo aircraft and will begin the process of selling its assets to the highest bidders.

A court-appointed trustee will be named to oversee the sale.

“Because it was a grim possibility, it takes us all by surprise,” King said.