The losses keep mounting for Island Air.
Hawaii’s second-largest carrier, which on Oct. 1 will have its fourth top executive in two years, saw its second-quarter loss double to $3.6 million from $1.8 million in the year-ago quarter, according to data released Monday by the U.S. Department of Transportation.
It was the fifth straight losing quarter under owner Larry Ellison, the fifth-richest person in the world with a net worth of $49.2 billion, according to Forbes magazine. Ellison purchased Island Air for an undisclosed price in February 2013. Ellison also owns 98 percent of Lanai. Last week Ellison stepped down as CEO of the software giant Oracle Corp., which he co-founded.
Island Air was struggling to survive when Ellison bought it. It only had two aircraft. In March 2013, a month after Ellison acquired the local carrier, it transported only 12,848 passengers. That was the lowest monthly total for the airline since at least 2003, according to DOT data.
But last quarter Island Air transported 114,378 passengers, including 43,101 people in June. For the April-June period, Island Air’s passenger traffic was up 70.6 percent from 67,048 during the year-earlier quarter.
The additional passengers helped boost Island Air’s revenue 17.9 percent to $8.6 million from $7.3 million in the year-earlier quarter.
Island Air, which has about 5 percent of the interisland market, is awaiting the arrival later this year of two 71-seat Q400 NextGen turboprops that would represent the largest planes in its fleet. The carrier operates more than 250 weekly flights between Oahu, Maui, Kauai and Lanai with a fleet of five 64-seat ATR-72 turboprop aircraft.
"I’m not concerned about Island Air (losses) because it’s kind of a transitionary time for them, and their bottom line will improve when the Q400s come onboard and their revenue picks up further," Hawaii aviation historian Peter Forman said.
Island Air will be continuing its turnaround under new leadership.
The airline had been turning things around under CEO Paul Casey, who took over May 1, 2013. But earlier this month Island Air announced that Casey was stepping down and would become an adviser to Island Air’s board of directors. His replacement, former president and CEO David Pflieger of Fort Lauderdale, Fla.-based Silver Airways, will take over at Island Air on Oct. 1.
Casey was out of the country on vacation and unavailable to comment, according to a spokeswoman in Honolulu.
The switch to Pflieger marks the airline’s fourth top executive since October 2012 when Les Murashige was named president of the airline and took over the reins from CEO Lesley Kaneshiro. Operating without a CEO, Murashige was in charge of the airline when Ellison bought it. Casey, a former CEO of both Hawaiian Airlines and the Hawaii Visitors and Convention Bureau, was named to the top post the following April and took over shortly thereafter.
Island Air boosted operating expenses 28.5 percent last quarter to $11.6 million from $9.1 million in the year-ago period. Maintenance expenses rose 45.4 percent to $2.3 million from $1.6 million.
"Part of the extra expenses have been very extensive training programs for employees in putting a quality product together," Forman said. "That’s a type of investment that will pay dividends in future years.
"The losses also reflect the operations of the larger airplanes, which are considerably larger than the (37-seat de Havilland) Dash-8s that they were operating with previously."
Island Air, which ceased service to Molokai on April 1, also has faced increased competition from Hawaiian Airlines’ new turboprop operation, ‘Ohana by Hawaiian, which began daily service to Molokai and Lanai in mid-March.
"I think that ‘Ohana would be a very serious competitor, so there is some impact by ‘Ohana," Forman said.
