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Aloha, Aloha

posted by John Pottow

Some readers might have seen that Aloha airlines went into chapter 11. Again. They earlier flew there in 2004, scrubbed their books a bit, and then emerged.

Why back in? Couple reasons, they say. First, fuel is really expensive. (Who knew?) Second, Mesa (allegedly) ripped off their business plan in violation of a confidentiality agreement signed during the 2004 proceedings when they were soliciting capital. Bankruptcy whining? Not necessarily: Mesa lost a trial against fellow plaintiff Hawaiian airlines just recently (and is appealing).

This raises a question in my mind. Is Aloha's refiling a "failure" of chapter 11? Is it a chapter 22? On the one hand, if it's just gas-is-expensive, then maybe they should have foreseen that. Or, more precisely, maybe if their viability is so marginal that even a freshly restructured Aloha can't survive with these gas prices, then they should liquidate.

On the other hand, if they got screwed unexpectedly by a commercial party, then maybe it's just bad timing. As such, is refiling "per se" proof of a chapter 11 system failure?

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