Mahalo for supporting Honolulu Star-Advertiser. Enjoy this free story!
Larry Ellison, the billionaire who bought 97 percent of the island of Lanai in June, is adding a small interisland airline to his Hawaii collection.
Ellison is finalizing a deal to buy Island Air, according to two sources familiar with the situation.
Island Air, a turboprop carrier with 5 percent of the interisland market, typically flies five flights a day to Lanai.
Owning Island Air would ensure a steady stream of visitors to Ellison’s Lanai holdings, including The Lodge at Koele, the Four Seasons Resort at Manele Bay, two golf courses and a luxury home development.
"You’re bringing people to your own resort properties," said Colorado-based aviation consultant Mike Boyd. "You never encourage people to buy an airline, but I think it makes sense. You’re in the islands, and there may be some opportunities there. I think it could work."
Island Air announced last week that it had a preliminary agreement to be sold to an undisclosed buyer. Island Air spokesman Michael Rodyniuk, who repeatedly declined to identify the buyer, said Thursday the buyer has "demonstrated to us to be financially fit. By reputation, these folks are very well financed."
Ellison, the co-founder and CEO of Oracle Corp., is listed by Forbes as the third-richest person in America with a net worth of $41 billion.
Ellison has not disclosed what he paid for the 97 percent of Lanai that he bought from fellow billionaire David Murdock, chairman of Dole Food Co. He has also said little about his plans for the state’s sixth-largest island with its 3,200 residents.
In an October interview with CNBC, Ellison talked of his plans to make Lanai "a laboratory for sustainability in business of small scale" with solar power, electric cars and organic farms. He did not mention his plans for tourism on the island.
An Oracle spokeswoman declined comment Thursday about Ellison’s involvement.
A spokesman for Lanai Resorts LLC, the company set up by Ellison to manage his holdings on Lanai, said Chief Operating Officer Kurt Matsumoto "doesn’t know anything."
Lesley Kaneshiro, the CEO of Island Air until stepping down on Dec. 31, has since joined Ellison’s Lanai Resorts as vice president of finance.
Island Air, which has 245 employees, has seen a decline in passenger numbers in five of the past six years. But Rodyniuk, the Island Air spokesman, said the airline did well during the Christmas period and that future bookings look "quite strong."
The airline announced in July it would be adding new aircraft into its fleet. It operates two 37-seat de Havilland Dash 8s, but both of those turboprops have to be returned to their lessor within the next five months. Island Air has one idled 64-seat ATR 72 awaiting certification from the Federal Aviation Administration, and the company said it is attempting to acquire another ATR 72.
Rodyniuk said the new buyer was still doing "due diligence" with the company’s books and that he expected that to be finished by the end of this month and the sales transaction concluded by mid-February. He said there has not been a final sales purchase agreement.
71
STAR-ADVERTISER