Aloha will honor all tickets and its frequent-flier mileage program will not be affected by the bankruptcy, the company said.

Aloha has to cut costs to compete in an industry increasingly dominated by budget carriers, Banmiller said. Aloha's goal is to reduce operating expenses by up to 15 percent, or $60 million, in 2005 by renegotiating aircraft leases, labor contracts, and reassessing operations including Mainland routes.

All staffing levels will be reviewed, Banmiller said. He would not eliminate the possibility of layoffs at the airline, which employs 3,668 people.

"If Aloha is to effectively compete, we must align our aircraft lease rates to market levels and match our expenses to those of competitors who have already benefited from bankruptcy protection," said Banmiller.

Aloha joins Hawaiian Airlines, United Airlines and ATA, which have all filed for bankruptcy protection from creditors and fly routes into Hawai'i. Those moves by competitors were a key factor in Aloha's decision to reorganize costs through bankruptcy.

"Almost 65 percent of seats flown to Hawai'i are flown by carriers that are in bankruptcy," Banmiller said. "We can't allow anybody to have a competitive edge on the cost landscape.

It's the first time Aloha has filed for bankruptcy. Competitor Hawaiian Airlines is in its second bankruptcy since 1993.

Hawaiian Airlines trustee Joshua Gotbaum, who hopes to lead that company out of bankruptcy in the next few months, expressed understanding for Aloha's situation.

"These are difficult times for all airlines," he said. "Bankruptcy is hard on a company and its employees so we have lots of sympathy for our colleagues and competitors at Aloha."

Aloha's Chapter 11 filing is indicative of the challenges the airline industry is facing, said Hawai'i Tourism Authority executive director Rex Johnson.

"It's pretty much what's happening in the airline industry overall, not only locally," he said. "Hawaiian's in Chapter 11 right now and hopefully they'll come out, and now Aloha's going in and hopefully they'll come out. It's indicative of what's happening in the airline business both nationally and locally.

"It's a very tough business right now, especially with fuel prices the way they are and all the sub-effects of 9/11."

Earlier this month Aloha laid off 12 senior-level managers and froze 35 open management positions, citing higher fuel costs.

Aloha lost $6 million in the third quarter, the fourth quarterly loss in a row for Aloha. In comparison, Hawaiian Airlines had an operating profit in the third quarter of $31.6 million.

Gov. Linda Lingle's tourism liaison, Marsha Wienert, wasn't too surprised by the news of Aloha's bankruptcy filing.

"I know that they had been struggling," she said. "And so if their board has determined that they need to go this route to be able to come out a much stronger airline, we support every effort that we can."

According to Aloha's bankruptcy filing, the company's biggest unsecured creditors include First Hawaiian Bank ($42.8 million), American Express ($13.4 million) and the Airlines Reporting Corp., which provides ticketing and other services, ($12.2 million). Other unsecured creditors include the state of Hawai'i ($1.4 million) and Boeing Commercial Airplane Co. ($360,000).

Banmiller said bankruptcy protection would provide the airline with a 60-day window to continue operating its leased aircraft without having them repossessed by their owners. He added that the company already is in negotiations with its five labor unions and that they were close to agreements with three of them. He would not disclose which unions were near a deal or the concessions the airline was seeking.

Aloha will seek savings in a variety of ways "from labor issues and renegotiation of contracts and wage rates and work rules to renegotiation of aircraft leases," Banmiller said.

Randy Kauhane, assistant general chairman for the International Association of Machinists & Aerospace Workers District Lodge 141, declined comment, saying he needs to discuss the matter with the union's officers first. The IAM represents about 1,600 workers at Aloha.

Outrigger Enterprises chief executive David Carey said Aloha's filing "concerns me a little bit, but yet there seems to be some companies that have successfully migrated out of bankruptcy situations."

"I'm optimistic that they'll work through it and will be successful, particularly their ... long-haul flights because I think they're an important provider of a niche market to the state. But it's more of an expression of hope than knowledge. They're owned by some smart people, so I believe they'll do the right thing to put it together."