Layoffs follow purchase of Mokulele Airlines

Southern Airways announced today that it is laying off 10 percent of the staff of Mokulele Airlines, a carrier that it purchased about two weeks ago.

The deal, which closed Feb. 8, made Southern the nation’s largest commuter airline operator. At the time of the sale, Southern’s chief marketing officer Keith Sisson had said the deal would absorb all assets of Mokulele Airline, including employees. But today, Sisson confirmed that the company has cut about two dozen employees, mostly ground staff, from the 300 or so people that it employs in Hawaii.

“We weren’t expecting this, but after getting into the operation and saying how everything operated it became necessary. Sometimes we had more employees working the flight than passengers on the plane,” Sisson said. “I hate to lose anybody but this is a problem from the previous owner that we are being forced to deal with. We’ve always been an expansion airline. We just can’t grow unless we have solid footing.”

Southern Airways, which was founded in 2013, has been on a strong growth trajectory and will now serve 30 cities stretched across five time zones. The acquisition, which was the carrier’s third deal in four years, added Hawaii and California to Southern Airways’ portfolio.

Rob McKinney, Mokulele president, said in a recent letter to employees, that the staffing changes represented the “short-term pain necessary to ensure the longevity of our brand.”

“In December we had one of our best months from a revenue perspective, but it was a terrible month as it relates to profitability,” McKinney said. “This was one of the factors that caused the Hansen’s to sell. As you can imagine, we can’t be here for the long term if our company continues to lose money each month.”

McKinney also said that the company needed to be “prepared for the effect on the market that Southwest will have on pricing in Hawaii.”

Sisson said Southern was taken aback by Southwest’s aggressive plan for interisland routes, which will have an impact on every carrier that is operating in Hawaii.

“We need to make sure that we are ready for that impact — it will affect pricing, frequency, maybe even routing,” he said.

Sisson said the carrier hopes the cuts are short-lived and that it would enter expansion mode soon.

“It’s dependent on how quickly we can get interline agreements with major carriers and we are talking now,” he said. “We might even need extra ground staff again if we are running more than one flight or more than a couple at a time.”