Economy, Federal Govt. and Aloha Airlines/Mesa/Go!

There were a number of good articles on this today [Apr. 11th] after the hearing [Apr. 10th] in the U.S. Senate on this matter.

First Harry Eagar of the Maui News had a couple good articles today:

"Aloha CEO: Feds brushed off complaints over go!: Panel told Department of Transportation was interested only in low fares" http://www.mauinews.com/page/content.detail/id/502452.html?nav=10 Just to point out a few good quotes:

"...Charles Willis, owner and chairman of Island Air, also said it was obvious that go!’s price wars, when prices stepped down from the introductory $39 to $29, $19, $9 and, briefly, $1, were a predatory maneuver...

...By his [Banmiller's] estimation, Aloha had made itself into the most efficient airline in the business, measured in cost to deliver a seat between island airports. According to a consultant’s study, Aloha’s cost was $50, Hawaiian’s was $55 and go!’s was $67. In theory, the most efficient carrier is supposed to prevail in an unregulated market...

...Banmiller said he searched hard for an investor, but fuel costs changed the picture so much that no outside money could be found. The upset state of credit markets has dried up outside money for all airlines, according to James May, chief executive of the Air Transport Association. So Banmiller sought a rescue from another, bigger airline. All were so preoccupied with their own fuel-driven alarms that they were not interested, he said..."

"Bad news piles up for Mesa Air Group"
http://www.mauinews.com/page/content.detail/id/502454.html?nav=10 Just to point out a few good quotes:

"WASHINGTON — The stock of Mesa Air Group dropped another 15 percent Thursday, closing at 81 cents. Industry observers had Mesa at or near the top of their lists of the next airline that might [fail], and in testimony before a Senate committee the owner of Island Air said both Mesa’s go! and his airline might not survive if government action does not come soon. The bad news kept piling up for Mesa. MAIR Holdings Inc. said its Big Sky subsidiary had received a notice of default and demand for payment of $4.8 million from Mesa Airlines Inc...

...Mesa is short of cash and it acted to draw on a $1.9 million letter of credit that MAIR established with Mesa in 2005...

...There are more than 26 million shares outstanding [of Mesa stock]. At 81 cents, the company is valued at less than $22 million — about what it has spent trying to get go! going. Next month, it will seek shareholder approval to raise more than $38 million in new capital through a stock sale...

...David Banmiller, president of Aloha Airlines, held up four fingers. He told Inouye that go! had lost around $20 million in 16 months with go! flying CJRs. “That’s with four planes,” he said. Go! is now using seven RJs, having expanded its interisland service when Aloha shut down. Before Aloha shut down, it reported a load factor of just under 68 percent..."

More on this in my next post on Mesa and Go!

And the Honolulu Advertiser had a couple good articles related to this:

"Airline's comeback a long shot" by Dennis Camire
http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080411/NEWS09/804110371/1001 Just to point out a few good quotes:

"...The state's No. 2 carrier shuttered its passenger service and laid off 1,900 workers on March 31. The closure, representing the largest layoff the state has ever seen, came after the airline lost more than $120 million in the past two years. Aloha puts much of the blame for its failure on Mesa Air Group, owner of discount carrier go!, which is itself in financial difficulty...

...Mesa's stock dropped from nearly $8 to less than $1 per share in the past year. It traded at a 19-year low yesterday, falling 15 cents to close at 81 cents on the Nasdaq market...

...On Monday, Mesa warned investors that it could default on its bonds after the airline lost a $20 million-a-month contract with Delta Air Lines. Mesa is suing Delta to enforce the contract, which generates more than 70 percent of Mesa's annual operating revenues of $327.8 million...

...Many airlines are struggling with the high price of jet fuel, which has skyrocketed since January. Aloha officials have said fuel costs combined with competition from go! pushed it into bankruptcy..."

"State agency trying to shore up Isle tourism:
Airlines' shutdown could discourage future visitors" by Robbie Dingeman
http://www.honoluluadvertiser.com/apps/pbcs.dll/article?AID=/20080411/BUSINESS02/804110337/1071 Just to point out a few good quotes:

"Saying the state's visitor industry faces the biggest potential tourism crisis since Sept. 11, the Hawai'i Tourism Authority yesterday pushed forward with plans to try to boost visitor demand in the islands in the aftermath of two major airline shutdowns last week...

...But various board members and industry officials warned that the industry must continue to respond quickly or face a growing problem. Johnson agreed that the situation is serious. "We have essentially lost about a million North American seats" or roughly 15 percent of the airline seats that were available to the West Coast...

...Cheryl Willliams, regional director of sales and marketing for Starwood Hotels & Resorts Hawai'i, said...she's concerned about a slowdown in the pace of people booking for the months ahead including the summer. She said travelers are potentially spooked by the prospect of paying double or triple the airfare they had earlier anticipated. 'I think it will be more of a long-term effect.'...

...Monahan, of the Hawai'i Visitors and Convention Bureau, said the industry needs to quickly address the issues, with marketing and a plan: 'It's something we've got to respond to quickly.'"

Aloha, Brad