UPDATE 1-Aloha Airlines shutting down passenger operations
(Adds details, background, Mesa stock activity, byline)
NEW YORK, March 31 (Reuters) - Aloha Airlines is shutting down its passenger operations less than two weeks after the Honolulu-based company filed for bankruptcy protection as a court seeks buyers for its remaining units.
Aloha has said its demise stemmed from "predatory pricing" from Mesa Air Group's (MESA.O) low-cost go! airline. Mesa, whose shares rose 3 percent, was not immediately available to answer those claims on Monday.
Aloha said late on Sunday that Monday would be the last day for its passenger operations. The shutdown will affect about 1,900 employees.
"We simply ran out of time to find a qualified buyer or secure continued financing for our passenger business," Chief Executive David Banmiller said. "We had no choice but to take this action."
Aloha said code-share partner United Airlines (UAUA.O) and other carriers were prepared to accommodate its passengers.
Passengers who do not want to use other airlines should contact their travel agent or credit card company to request a refund, Aloha said.
The company said its air cargo and aviation services units would continue to operate while the U.S. Bankruptcy Court seeks bids from potential buyers.
On Thursday, Saltchuk Resources Inc said it intended to buy Aloha's air cargo business, according to the airline.
'PREDATORY PRICING'
In its bankruptcy filing, Aloha said it was unable to generate enough revenue from its inter-island passenger business because of go!'s pricing.
Aloha said it was forced to match go!'s "below-cost fares" at a time when the airline industry is facing unprecedented increases in the cost of jet fuel.
On Monday, Mesa said go! would increase the number of daily flights it operates from an average of 54 to 94, beginning on Tuesday.
Mesa said go! would operate between 11 and 13 round trips a day from Honolulu to Maui, Lihue, Hilo and Kona, offering all seats at $49 through April 7.
The fuel price spike, coupled with a steadily weakening U.S. economy, has stalled the airline industry's modest recovery from the 2001-2006 downturn. Oil prices CLc1, which are directly related to jet fuel costs, remain above $100 a barrel.
Big airlines are beginning to shrink to cope with much tougher operating conditions. On March 18, Delta Air Lines Inc (DAL.N) unveiled plans to cut 2,000 jobs and scale back flights.
The previous downturn in the airline industry resulted in bankruptcies and unprecedented out-of-court restructurings.
However, analysts say that this time around, major U.S. carriers appear leaner and in better shape to weather the oncoming turbulence.
Mesa shares were up 7 cents at $2.44 in morning Nasdaq trade. (Reporting by Mark McSherry; editing by John Wallace and Lisa Von Ahn)
