Hawaii airlines in financial trouble
HONOLULU (eTurboNews) — Aloha Airlines has joined its local competitor Hawaiian Airlines in filing for Chapter 11 reorganization bankruptcy amid the high cost of jet fuel. Aloha Airgroup Inc. filed its petition on Thursday, Dec. 30, in Honolulu. Reports claim the beleaguered airline owes $24.1 million to the government’s Air Transportation Stabilization Board, set up to help ailing carriers survive the attacks of Sept. 11, 2001, as well as nearly $21.5 million to First Hawaiian Bank.
Meanwhile, Hawaiian Airlines announced that former Hawaiian Airlines CEO John Adams and Adams-affiliated companies AIP LLC and Smith Management LLC have agreed to pay the airline $3.6 million to settle a lawsuit brought by Gotbaum last year over funds diverted from the airline.
Calling the situation “a sorry chapter in Hawaiian’s history” Hawaiian Airlines Trustee Joshua Gotbaum said, “Part of my mandate was to investigate Smith and Adam?s activities prior to the company’s bankruptcy. Once it became clear that funds had been improperly diverted, we took action. We?re pleased to be recovering a significant amount. The funds will help complete our successful reorganization of Hawaiian.”
Under the agreement, Adams and the affiliated companies will pay $3.6 million to Hawaiian Airlines once the Bankruptcy Court approves and Hawaiian successfully exits bankruptcy.
The Gotbaum lawsuit was filed in November 2003, nine months after Hawaiian filed for Chapter Eleven bankruptcy protection.
In an earlier separate settlement with the US Securities & Exchange Commission, Adams and the affiliated companies agreed to pay $2.5 million, which funds will be used to compensate shareholders who were disadvantaged by the tender offer.
In 2002, Aloha and Hawaiian announced a merger, but the two never reached a deal.
January 5, 2005
Posted in: Airlines & Railways