Aloha Airlines
reduces senior
management 36%

Recently announced layoffs
will help the struggling local
carrier trim expenses by
$3 million annually

Recent layoffs at Aloha Airlines, along with a hiring freeze, are cutting the company's senior management by 36 percent and will save the struggling carrier more than $3 million a year, Aloha's new president and chief executive said in a memo to employees.

The memo underscores the sweeping nature of the changes that David A. Banmiller, a former executive of Jamaica Air, is making at the local airline he joined less than a month ago.

Aloha Airlines said Tuesday that soaring fuel costs prompted it to lay off 12 top managers and to freeze 35 open management positions, though the company did not go into detail. Several senior vice president, vice president, regional vice president, staff vice president and director positions were eliminated, the memo said. Also, Aloha will not seek to fill an open position of executive vice president/chief operating officer.

"It is imperative that we take action immediately to strengthen the financial position of our company," Banmiller said in the memo, which was dated last Friday. The Star-Bulletin obtained the memo yesterday.

Banmiller has taken Aloha's reins at a turbulent time in the airline industry, when few carriers are making money and many are restructuring, including Hawaiian Airlines. Banmiller succeeded Glenn Zander, who stepped down to devote more time to his family and remains on the board.

"Today our industry is in chaos. Every legacy carrier is fighting to survive in the midst of attempts to compete against low-cost carriers and grab market share," Banmiller said in the memo. "At Aloha, we face the same tough challenges with high operating costs that can no longer be sustained."

The privately held company, which had a $1.3 million profit in 2002 after four straight years of losses, began its recent string of quarterly losses with a $3.2 million loss in the fourth quarter of 2003. The airline lost $6.4 million in the second quarter of this year to extend its loss for the year to $13.6 million.

While fuel costs posed similar problems for Aloha during the Gulf War in 1991, the price of fuel has risen to an unprecedented level since 2002, Glauberman said.

To streamline costs, Banmiller has realigned the company's operations and has told employees that he intends to beef up technology and marketing.

"On the marketing side, we may have missed revenue opportunities due to a fragmented marketing structure as well as a scheduling process that fell short of getting sufficient input from all concerned stakeholders in the company," Banmiller said in the memo.

The appointment of C. Thomas Nulty as senior vice president of marketing and sales was publicly announced Tuesday along with the layoffs.

Nulty, who retired in 2003 as president of corporate travel management services provider Navigant International Inc., will oversee sales, pricing and revenue management, advertising and other areas at Aloha.

In addition to the management restructuring, Banmiller plans to reduce costs by cutting flights and possibly selling Aloha's contract-services and air-cargo divisions. Aloha recently said it plans to eliminate its twice-weekly flights to Pago Pago in American Samoa and to Kwajalein and Majuro in the Marshall Islands. Earlier in the year, Aloha said it would cut flights to Rarotonga in the Cook Islands.

The last major layoffs at Aloha Airlines took place in 2001 following the Sept. 11 terrorist attacks. The carrier, founded in 1946, employs more than 3,600 people and offers 620 interisland flights and 140 trans-Pacific flights per week.