Billionaire Larry Ellison’s first full quarter as the owner of Island Air turned out to be losing one.
The interisland carrier lost $1.8 million in the April-to-June period as it moved to larger aircraft and a new management team.
Ellison, the Oracle Corp. CEO who also owns 97 percent of the island of Lanai, bought the airline for an undisclosed price in mid-February from Charlie Willis’ family-owned company, Gavarnie Holding LLC, based in Novato, Calif.
"It’s awfully hard to make money in Hawaii," said Colorado-based airline consultant Mike Boyd. "How many times did Aloha go bankrupt? How many times did Hawaiian go bankrupt, although they have a much larger route system now than they did before? If you’re going to make money flying interisland, that’s tough."
Despite the loss, Island Air’s revenue rose 26.1 percent in the quarter to $7.3 million from $5.8 million in the first three months of this year, according to data released Monday by the U.S. Department of Transportation. Although the airline is privately owned, it is now required to report its financial data because it has at least one aircraft with more than 60 seats.
Island Air began switching to 64-seat ATR 72s from 37-seat de Havilland Dash 8 aircraft in February and now has four ATRs in its fleet with a fifth one expected to be delivered sometime this month. It no longer has any Dash 8s.
CEO Paul Casey, who took over on May 1, said in a Sept. 16 internal email that the company is working on a plan to acquire a new fleet of reliable turboprops following operational issues with its recently acquired fleet. Casey said in the email obtained by the Star-Advertiser that the process will take "a few weeks."
Casey didn’t respond to a request Monday to comment on the company’s second-quarter earnings.
Although Island Air had net income of $5.6 million in the first quarter of this year, it was bolstered by $7.4 million in nonoperating income that Casey previously declined to identify.
The airline had operating losses of $1.7 million and $1.8 million, respectively, in the first two quarters of this year. Operating expenses increased to $9.1 million in the second quarter from $7.5 million in the first quarter.
Year-earlier comparisons are unavailable because the airline was not required to report its financial data in 2012.
