INSIDER
IN THE HOT SEAT
David Banmiller
CEO, Aloha Airlines
Aloha Airlines emerged from bankruptcy Q: Why?
Feb. 17, less than 14 months after it filed A: We were too spread out. When you
for Chapter 11 protection. Travel Weekly have operational problems, it’s harder
Senior Editor Andrew Compart talked with to recover. Second, concentration works
Aloha President and CEO David Ban- better for advertising and market pres-
miller, an industry veteran who also ence, because if you have one airplane
worked on turnarounds at Air Cal, Pan in a city, you don’t have the amount of
Am and Sun Country. revenue to support more advertising.
Q: You wanted to emerge from Chapter Q: Most of your service is interisland.
11 quickly, preferably within a year. Why How will you respond if Mesa starts
was that so important? low-fare, interisland service this spring?
A: Because bankruptcy is expensive. We A: What we did was get our cost struc-
were paying 15.5% interest on $65 mil- ture as low as possible. It’s tough to go
lion in loans. We averaged maybe $1.5 up against somebody that’s got a low
million a month in professional fees. cost structure and a solid balance sheet,
And when you’re in bankruptcy you pay and we’re there now.
everybody — not just your own attorneys but also your creditor
committee attorneys, lender Q: What else is changing?
consultants, lender attorneys. A: Our Web site is a lot more
user-friendly and functional;
Q: How much did you pay in we tied that into our yield
bankruptcy-related expenses? management program. We
hired Sabre as a consultant to
A: About $18 million. We also evaluate everything, from how
had credit card holdbacks. we manage discount seats to
That probably cost us $15 mil- how we price cargo and who
lion. ARC and IATA hold back we have frequent flyer and
cash when you go into bank- code-share relationships with.
ruptcy. That was probably $15 million.
David Banmiller
Q: Information technology has been a
Q: What’s the difference between Aloha big issue for you. What’s changing?
now vs. when it filed for bankruptcy?
A: As an example, we don’t have gate
A: Cost structure. Unions [already] had readers, and most people do; gate read-
taken a 10% pay ers automate rev-
cut; we asked for enue accounting.
another 10%. We
eliminated de- We’ve just
fined-benefit pen- evaluated differ-
sion programs. e n t s o f t w a r e
We dramatically packages to auto-
reduced lease matecrewsched-
costs on our air- uling. There’s
planes. We closed a number of cities some automation that we’re putting in
and returned some airplanes. for maintenance, to track airplanes and
maintenance records.
Second, we have a better capital struc-
ture now. We have a balance sheet that’s
very strong: The equity positions will be Q: Hawaiian also restructured. What is
$64 million, and the debt is $35 million, your advantage?
of which we’ve only drawn $15 million. A: Lower labor costs. Secondly, while
we have older airplanes, our cost of
‘Bankruptcy is expensive.
... When you’re in bankruptcy, you pay everybody.’
Q: How has Aloha’s business strategy ownership is probably 25% less. Hawai-
changed since the filing? ian picked up a little bit of marketshare
the past few months because of our
A: For service from Hawaii, we closed bankruptcy process and people wonder-
Vancouver and Burbank and South Pa- ing if we were going to survive. Our fo-cific routes and put all the resources cus is going to be on getting some of
into northern and southern California. that traffic back.
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TRAVEL CONFIDENTIAL
When a Czech Republic native who works for the
European Tour Operators Association men-
tioned a new Czech regulation to ETOA Exec-
utive Director Tom Jenkins, his ears perked up.
The regu- ator Grand Circle Corp. will receive an
lation, the award for its philanthropic efforts from
staffer told the Committee to Encourage Corporate
him, would Philanthropy, an association founded by
require that Paul Newman and Ken Derr of Chevron.
all visitors to
the Czech TC hears that the Sabre-Northwest
Republic have travel insurance to enter GDS agreement may be more of a mar-
the country. What little information keting victory for Sabre than a financial
Jenkins could find about it — all written one.
in Czech — left it unclear when it might Sabre can tell the world it locked up
go into effect, or if it’s already in effect. the participation of a major carrier for
He sent a letter to government officials five years despite tough market dynamics
asking for clarification — and urging and new competitors.
them to abandon the idea. However, Sabre may have given up a
lot of ground on economics.
What hotel has the highest occupancy Here’s one theory industry insiders are
rate in San Juan these days? The city has offering on how the unpublicized deal
more than 6,000 rooms in all styles and went down:
price ranges, but TC hears that the most Northwest, which filed for bankruptcy
popular hotel is none other than the 125- protection in September, pays Sabre pen-
room Best Western San Juan Airport Ho- nies on the dollar for pre-bankruptcy
tel, which opened in July 2004 after a $7 transactions.
million redo — and hasn’t faced an emp- And Sabre gives Northwest a substan-
ty bed since. tial discount on GDS fees in the five-year
Is the high occupancy rate related to deal, getting in the range of the numbers
the number and frequency of flights can- Northwest had in mind.
celed by American? Take a guess. Then Sabre writes off the discount as a
loss. With the momentum from the mar-
On National Philanthropy Day (Feb. 27), keting win, Sabre can go out and try to
TC learned that Boston-based tour oper- garner new agreements.
Friends & Colleagues
Choice Hotels International tion of national accounts
promoted Alexandra Jaritz- manager, U.S. division. An-
Kendrick to vice president, derson has served the airline
development operations. since 2001, managing Aero-Jaritz-Kendrick previously mexico’s national corporate
held the position of senior accounts in the central re-director, brand strategy. gion. He is an 18-year veter-
In other Choice news, an of the airline industry.
Dan Couture was promoted
to regional vice president, J. David Greydanus was
extended-stay development. named senior vice president
Couture has more than 30 of brand management for
years’ experience in the hos- Hilton Hotels Corp.’s new
pitality industry, including Waldorf-Astoria Collection.
stints with Cendant, Doubletree, Accor and Radisson
as well as several independent hotels and restaurants.
Casino in San Juan and will
oversee the $50 million ren- Greydanus was previously
ovation of the former senior vice president of
Wyndham property. brand management for Hil-
Raul Bustamante was
named managing director
of LXR Luxury Resorts’
Condado Plaza Hotel &
(SUBMIT YOUR STORIES AND PHOTOS: Gerry Bourbeau, Travel Weekly deputy
managing editor, at gbourbeau@travelweekly.com.
(
Bustamante, a past presi- ton’s Embassy Suites Hotels
dent of the Puerto Rico Ho- brand.
tel and Tourism association,
served with Hilton Interna- Rob Boksem was named
tional for 20 years and was Holland America Line’s new
general manager of the director of technical opera-Caribe Hilton in San Juan tions. Boksem joined HAL
during that period. in 1978 as a ship electrician.
ILLUS TRATION B Y J. C. SUARES
He has been deputy direc-
Aeromexico promoted Kris- tor of technical operations
tian Anderson to the posi- since 2000.
