Island Air, rescued from a possible shutdown by billionaire Larry Ellison nearly a year ago, lost money for the second straight quarter as its restructuring continued.
The local interisland carrier had a net loss of $1.9 million during the July-September period — its worst quarter since Ellison took over in mid-February, according to the U.S. Department of Transportation data released Friday. That followed a loss of $1.8 million in the second quarter — Ellison’s first full quarter as owner.
Island Air, which last week introduced the native iiwi bird as its new logo — its first re-branding under Ellison — also has been seeking to bring in different aircraft to replace its aging ATR-72s, which are about 20 years old and have been prone to mechanical breakdowns.
Last month the airline reached a "new aircraft letter of agreement" with its pilots that covers pay and work rules for both the 64-seat ATR-72 and the 78-seat Q400, according to the Air Line Pilots Association.
Island Air currently flies ATR-72s, which it began using last year after phasing out its 37-seat de Havilland Dash 8 aircraft. Now the airline is looking to change its aircraft for the second time in a year. It has five ATR-72s in its fleet, but only three are in service now.
The airline last used a Q400 in its fleet in 2006 before taking the plane out of service and canceling other Q400 orders when Mesa Air Group’s go! entered the market that year and brought more competition.
Capt. Monte Vories, chairman of ALPA’s master executive council for Island Air, said in ALPA’s January magazine that he is optimistic about the company’s future.
"For too long, the company’s business plan was set on survival mode," Vories said. "The pilots fought long and hard to keep our airline flying, and we embrace this new chapter. We hope that it brings renewed success to our airline, our employees, and our passengers for many years to come."
Island Air CEO Paul Casey, who took over May 1, could not be reached for comment Tuesday, but he praised his employees Monday in an internal email obtained by the Honolulu Star-Advertiser.
"The reaction from our customers to our increased focus on them and improved communication throughout the company has been very positive," he said.
His response is a marked improvement from an internal email he sent to employees in September when he chastised the staff after "a bad operating weekend" that included one seven-hour delay.
In that email he said that communication within the company was "bad" and resulted in a lack of communication to the customer. He said the airline is putting together a plan to ensure that the communication breakdown never happens again.
In Monday’s email, Casey said improvements around the premises have been aimed at employees as well as customers, with new back-office space in Honolulu, a new pilots and flight attendants lounge at Honolulu Airport, new check-in counters in Honolulu, new signage systemwide and a new corporate office. Island Air moved its corporate headquarters less than two weeks ago to the Airport Trade Center at 550 Paiea St. from its previous site about two miles away at 99 Kapalulu Place, off of Lagoon Drive.
He also said in the email that Island Air hired Candy Chung as director of guest services. Chung has worked at the Four Seasons Lanai. Ellison owns 97 percent of Lanai.
"She and her team focus on caring for all of our VIP customers with emphasis on the Four Seasons Lanai guest," Casey wrote. "She has hired two managers and we leased two Mercedes Sprinter vans to transport guests to and from their mainland connections."
He also said Island Air has hired a group out of Chicago that develops service training and standards for Four Seasons.
"It will be rolled out companywide over the next few months," he said.
Island Air’s emphasis on Lanai often has left some passengers wondering about the company’s commitment to the carrier’s other routes. Island Air has more than 200 flights a week that service Oahu, Maui, Molokai and Kauai, as well as Lanai.
Although Island Air is privately owned, it is now required to report its financial data to the DOT because it has at least one aircraft with more than 60 passenger seats. In its latest report, which was delayed, Island Air’s revenue slipped to $7.1 million in the third quarter from $7.3 million in the second quarter.
Revenue in the third quarter was boosted by $874,000 in baggage fees and $107,000 from reservation cancellation and change fees. That compares with $851,000 and $123,000, respectively, from those fees in the second quarter.
Island Air cut its operating expenses in the third quarter to $8.5 million from $9.1 million in the second quarter, and its operating loss narrowed to $1.5 million from $1.8 million.
Year-earlier comparisons are unavailable because the airline was not required to report its financial data in 2012.
