Aloha Airlines went into Chapter 11 last week. That was not enough. Now the carrier says it is ending passenger service after 60 years of operation.
Aloha is small and flies in only one market, but the reasons for its demise still had to do with falling ticket prices forced down by competition and risking fuel prices.
It is no coincidence that carriers like AMR (NYSE:AMR), Delta (NYSE:DAL), and Northwest (NWA) are near their 52-week lows. Someone, somewhere thinks that one or more of these airlines won’t make it, at least in its current incarnation. And, that would probably not be a bad bet.
One of the reasons, perhaps the sole reason, that Northwest (NWA) wants to merge with Delta (DAL) is because of perceived cost savings, Whether those are real or not doesn’t seem to matter. There is a desperation to the push to combine airlines which is a sign that management does not see any other way out of the current toxic environment.
But, mergers may not save anyone. The industry may have to go through a Chapter 11 filing or two. It happens to airlines about once a decade. Why should this time be any different?
Douglas A. McIntyre
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