Island Air tackles losses as it grows fleet, flights

Island Air, which has been expanding under new ownership, ended 2016 with its 15th straight quarterly loss as it began its change to larger, more efficient aircraft.

The state’s second-largest carrier, whose majority interest was acquired by Hono­lulu venture capitalist Jeffrey Au and other investors in February 2016, widened its loss during the fourth quarter to $5.6 million from $4.5 million in the year-earlier period, according to data released Tuesday by the U.S. Department of Transportation. For the year, though, the airline narrowed its loss to $17.1 million from $20.7 million.

“We have reduced our losses substantially,” Island Air President and CEO David Uchiyama said in an email. “However, we anticipated that (with) the growth of our organization and transition to the new Bombardier Q400 fleet, that the effects would be felt into the first half of 2017. We believe our new fleet, combined with the commitment of our dedicated team members, is strongly positioning us for continued growth and expansion.”

Island Air’s expenses jumped 37.7 percent in the fourth quarter to $13.9 million from $10.1 million. That pushed total expenses for the year up 4.4 percent to $49.7 million.

Revenue, though, soared 80 percent to $11.1 million from $6.2 million for the quarter and was up 30 percent for the year to $35.7 million from $27.5 million as the airline resumed service to two former markets.

“We continue to make great progress in moving Island Air forward toward building a successful and affordable interisland airline for locals and visitors alike,” Uchiyama said. “Over the past year we successfully expanded and launched service to the west side of Hawaii island (Kona) and restored service to Kauai. In addition, we completed negotiations to lease additional aircraft that Island Air is proud to have received and start service with two of our Q400 aircraft.”

Island Air took delivery of its first 78-seat Bombardier Q400 turboprop in December and began service in January. It currently has three Q400s in its fleet, with two in service and the third due to begin service May 15. The airline’s fourth and fifth Q400s are coming in this month, with service starting at the end of May and early June, respectively. A sixth aircraft is expected to arrive in June.

“We currently have four (64-seat) ATR-72s, three of which are still in service, and we will phase those out of our existing fleet over time as we retain the new Q400s,” Uchiyama said.

He said Island Air also is working on plans to serve Hilo later this year.

“We are still finalizing the details,” Uchiyama said.

Island Air, which currently offers 364 flights a week, said that by the middle of this month, it expects to increase the number of flights to more than 400 each week.

The airline expanded its workforce to 459 from 256 in February 2016 when the new investment group took over from billionaire Larry Ellison, who remains a minority investor in the company.