The speed with which Aloha Airlines shut its passenger business has surprised many, but not those familiar with the airline's bankruptcy case.

Lenders were unwilling to throw more money into the money-losing passenger service part of the operation and no other group was willing to come to the rescue, according to several people familiar with the case.

"I'm not blaming the lender," said one bankruptcy attorney who is involved in the case and didn't want to be identified. "It was a business decision. They didn't want to keep losing money, either."

Less than two weeks after filing for Chapter 11 bankruptcy protection, Aloha announced yesterday that it plans to halt passenger service with its last flight tonight. It will continue operating its cargo and charter operations.

People familiar with the bankruptcy case said the airline's hand was forced because its existing lenders were unwilling to put more money into passenger operations, no other lenders were interested in filling that void and no airline or investor group was willing to purchase the passenger operation or the entire company.

Even before filing for bankruptcy protection March 20, Aloha had been shopping its overall business and just the passenger operation to other airlines and investor groups. Aloha came close more than once to striking a deal, according to one person familiar with the case. But those potential deals collapsed, said the person, who like most people involved with the case was unwilling to speak on the record.

While Aloha was searching for buyers, its lenders were pressuring the airline to stop selling tickets to passengers, taking the position that such sales would further expose the lenders to more potential losses, the person said.

Aloha was under the gun to find a buyer by today, when it returns to bankruptcy court to get a financing arrangement extended, one person said.

"To pull the plug, it wasn't an easy decision," said David Farmer, Aloha's attorney in the bankruptcy case.

"But it would also be foolish" to continue operations under existing conditions, given Aloha's responsibilities to its employees, the public, owners and others, he said.

An indication of how quickly Aloha is bleeding financially came in a court filing yesterday. The airline said its unrestricted cash had dwindled from $3.8 million on March 20 to $900,000 as of yesterday.

Aloha's lenders are willing to fund the airline's profitable cargo and charter operations, but not its money-losing interisland and transpacific passenger service, according to one attorney.

Aloha cited the soaring cost of fuel and an interisland fare war, trigged by the entrance of go! airlines, when it filed for bankruptcy protection, a move that was meant to buy the company time while it restructured.

With no substantive offers for its passenger business, Aloha officials decided to stop the bleeding by shutting that operation, people familiar with the case said.

A tight credit market nationally added to Aloha's woes, making it difficult to find new lenders willing to risk their money in a slowing economy and a bare-knuckles interisland fare ware, several people said.

"In this credit market, no one else is crazy enough to lend," said one attorney.

Under bankruptcy law, Aloha could ask the court to force its lenders to allow the airline to use existing financing for its overall operation. But, to do that, Aloha would have to show that the lenders' funding was adequately protected, something that would be virtually impossible under existing conditions, several people said.

It's not unusual for a company that files Chapter 11 to be unable to continue operations in the same manner as before the filing, said attorney Don Gelber, who handles bankruptcy cases but is not involved in the Aloha's.

"What is unusual is that a company is forced to terminate a major segment of its business so rapidly," he said.

Other airlines operating out of bankruptcy have sold parts of their business — often lucrative parts — to raise money to focus on the rest of their operations. Years ago, Eastern Airlines sold its shuttle service while in bankruptcy, while Pan Am sold lucrative routes to sustain its operations.

But Aloha's case is different, in part because this is the airline's second go-around with bankruptcy. It first filed for bankruptcy protection in December 2004 and emerged only two years ago.

"It's not going to be your usual bankruptcy the second time around," said one attorney involved in the case.