Island Air, which lost $21 million over the last year and has never made a profit under billionaire owner Larry Ellison, is laying off 20 percent of its workforce, cutting service and postponing indefinitely a decision on bringing in a new fleet.
CEO Dave Pflieger said in a letter to employees and customers that the changes will take effect June 1 and that the company hopes to manage some of the workforce reductions through attrition and canceling current vacancies. The reduction is expected to result in the elimination of approximately 68 jobs.
“We expect we will still experience some furloughs,” he said in the letter released by the company’s public relations firm on Thursday but dated for the previous day. “Impacted employees will be notified within the next few days, with exit dates beginning in June.”
Island Air, which now has 341 employees, had 245 when Ellison bought the airline in February 2013 for an undisclosed price. Pflieger said the airline already has reduced its management team by 20 percent. That reduction took place over the previous seven months, Island Air spokeswoman Andrea Oka said.
The state’s second-largest carrier earlier this week changed its flight schedule starting June 1 by eliminating Kauai service and reducing the frequency on Honolulu-Lanai flights to two daily flights from five daily flights. Island Air also added a 25-minute layover in Maui to that Lanai route.
“Over the course of the past many months we have all worked hard to give our airline the best chance possible to grow and compete — and your patience while we worked to evaluate our situation and develop a realistic, viable business plan has been greatly appreciated,” CEO Dave Pflieger said in the letter. “Today, we are announcing that plan — a plan that we had hoped would include new aircraft, new routes, and new opportunities for all of us, our customers and our state. Unfortunately, record financial losses of more than $21 million last year alone, coupled with our inability to achieve the productivity and cost certainty we needed from our unions, demand that in the short term we pursue an alternate course of action — a course that while disappointing today, we hope will pave the way for a brighter future for Island Air in the tomorrows that lie ahead.”