Island Air said it has reached contract agreements with two of its three key labor unions and that the possibility of obtaining new aircraft “remains open.”
The pilots union is still negotiating on a new contract.
The state’s second-largest airline has been exploring an offer from aircraft manufacturer ATR to sell Island Air eight ATR 72-600 aircraft seating roughly 70 passengers each, and aircraft lessor Nordic Aviation Capital would purchase the five 64-seat ATR 72-212 turboprops that are currently being leased to Island Air.
“We are continuing to work on the ATR/Nordic Aviation Capital proposal and the possibility of obtaining new aircraft still remains open to us due to the support from our Teamsters- and TWU-represented employees as well as our non-represented staff,” Island Air CEO Dave Pflieger said in an email last week. “Almost 90 percent of these members voted ‘yes’ to our proposals for a sustainable future. We are continuing to hold discussions with our pilots.”
The International Brotherhood of Teamsters represents employees in customer and ramp service, aircraft maintenance and flight attendants. The TWU, or Transport Workers Union, represents flight dispatchers and crew schedulers. The pilots are represented by the Air Line Pilots Association.
Pflieger, who became CEO on Oct. 1, said the company’s principal request for all unions is to extend the date of new negotiations to a period when Island Air “expects to be done with restructuring and growth and to be profitable.”
In April the airline announced it was cutting 20 percent from its 341-member workforce, reducing service and postponing indefinitely a decision on bringing in a new fleet. Island Air, which now has 270 active employees, said it wanted to consolidate its operations to a smaller number of markets so it can fix its cost and revenue structure and become strong enough to grow in a sustainable manner.
On June 1 Island Air eliminated Kauai service, reduced the frequency of Honolulu-Lanai flights to two daily flights from five daily, and added a 25-minute layover on Maui for the Lanai route. The flight cutbacks left Island Air with only Honolulu-Maui and Maui-Lanai routes.
“Our restructuring efforts are well underway and already producing results,” Pflieger said. “The entire team here at Island Air has done an amazing job over the past 10 months significantly improving operational performance and reliability, enhancing customer service, increasing revenue and reducing costs. Our customers and business partners are all taking note of the positive changes. These results and others are proving that we have a very exciting future ahead of us — one that will greatly benefit the people of Hawaii and all of our employees.”
Island Air, whose second-quarter earnings are due to be released by the U.S. Department of Transportation next month, has not had a profitable quarter since being purchased by billionaire Larry Ellison in February 2013. It has lost $35 million during its first two years under Ellison, co-founder of software giant Oracle Corp. and a 98 percent owner of the island of Lanai.
“We have asked all of our employees to help us improve productivity and ensure cost certainty during a period of restructuring and growth,” Pflieger said.
Although Island Air serves only Oahu, Maui and Lanai now, Pflieger hinted that the carrier eventually plans to expand service.
“We are focused on fixing our 34-year-old company, growth, obtaining new aircraft that can serve Oahu, Maui, Kauai and the Big Island, creating more jobs and building a sustainable company that will provide our employees with great professional opportunities as well as real job security,” he said. “Equally important is our goal to create more competition and provide the people of Hawaii with an affordable alternative for interisland air travel.”
Pflieger said Island Air has not asked the unions for wage reductions or changes to benefit or retirement plans.
“All longevity- and senior-based annual wage increases remain unchanged,” he said. “We simply asked for contract extensions and some modest changes to labor agreements that would improve productivity and provide cost certainty.”
“In short,” he added, “we are doing what Hawaiian Airlines and almost all other airlines on the mainland have had to do in recent years to remain viable.”
