Island Air said its turnaround is on schedule even as financial losses mount.

The interisland carrier lost $5.8 million in the third quarter and produced its lowest revenue total since billionaire Larry Ellison purchased the airline in February 2013, according to data released Tuesday by the U.S. Department of Transportation.

Passenger traffic — along with revenue — has dropped sharply since the airline announced April 29 that it would cut 20 percent of its workforce, reduce service and postpone indefinitely a decision on bringing in a new fleet.

The 19,946 passengers that Island Air carried in September — the latest data available from the DOT — were the fewest in a month since the carrier transported 14,261 in April 2013. The $5.5 million in third-quarter revenue was down 44 percent from $9.8 million in the year-earlier quarter.

But despite the worsening trend, Island Air CEO Dave Pflieger said the fourth quarter will show marked improvement.

“As will be made clear when fourth-quarter results are filed with the U.S. DOT, Island Air’s passenger revenue and operating expenses, excluding restructuring costs, will all show significant improvement,” Pflieger said via email. “Furthermore, revenue since the third quarter is substantially exceeding our expectations, and year-to-date operating results through November are actually better than budget by more than $2 million. So, overall, our team is very pleased with our continued progress.”

Pflieger said the financial results in the third quarter were “completely in line” with the airline’s expectations.

“The increase in our quarterly loss was due to the suspension of service to Lihue (on Kauai), costs related to re-accommodating Lihue passengers to another airline, planned one-time costs related to the strategic restructuring of the airline and work related to our first-ever safety certification by International Air Transportation Association (IATA) safety auditors,” Pflieger said.

Colorado-based airline consultant Mike Boyd said Island Air is facing an uphill battle.

“It’s almost impossible to make money flying interisland,” Boyd said. “No aircraft has been designed that has the economics to operate well in Hawaii, but how else do you get from Lanai to Honolulu? There is no other way to get between the islands.”

Island Air, whose only two routes remaining are Honolulu-Maui and Maui-Lanai, has lost money for 10 straight quarters and is in the red by $45.9 million since Ellison bought the carrier from Charlie Willis of family-owned and San Francisco-based Gavarnie Holding LLC. The airline’s market share has now dropped to 3 percent to rank the airline third behind Hawaiian Airlines (92 percent) and Mokulele Airlines (4 percent), according to the latest data from the state Department of Transportation.

Pflieger, though, is not deterred. “The results we are seeing in all areas of the company give us confidence that Island Air will grow and become a successful airline in the future — without the need for a court-supervised restructuring.”

He added, “The Island Air you see today is not the Island Air of 2014 or prior years. We are making tremendous progress in our strategic long-term restructuring of the airline, and our team has done an absolutely superb job fixing and transforming Island Air into a new and much-improved airline that is extremely well positioned for future growth and success.”

Third-quarter loss

$5.8 million

Year-earlier loss

$4.2 million