Island Air’s string of losses continued in the second quarter amid restructuring efforts designed to make the state’s second-largest carrier profitable.
Since billionaire Larry Ellison bought the airline in February 2013, Island Air has lost nearly $40.8 million, including a loss of $5.8 million in the quarter ended June 30, according to data released Monday by the U.S. Department of Transportation. In the year-earlier quarter Island Air lost $2.1 million.
Island Air CEO Dave Pflieger said the wider loss was expected considering the transformation that Island Air is undergoing.
“The financial results recorded in the second quarter were completely in line with what we expected at this juncture of our strategic restructuring of the company, and more importantly, our quarterly results and overall results year-to-date continue to be better than our 2015 budget,” Pflieger said via email.
Revenue fell nearly 22 percent to $7.6 million last quarter from $9.7 million in the second quarter of 2014, according to DOT data, while operating expenses rose 14 percent to $13.4 million from $11.8 million. Pflieger said the 2014 data reported to the DOT has since been revised, but he didn’t have the data immediately available.
“Indeed, while revenue dropped in the second quarter, this was entirely due to the suspension of service to Lihue beginning June 1 and a planned reduction in commercial operations so we could operate more charter flights,” he said. “More notably, despite schedule changes which reduced the overall number of seats in our key market of Honolulu-Kahului, we generated more passenger revenue on that route in the second quarter of 2015 than we did in 2014.”
Island Air 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.
“We kicked off our restructuring efforts in the second quarter and those costs and related temporary increases in expenses are expected to continue while we work to fix the airline and position it for a strong future,” Pflieger said. “In addition, the airline had more expenses than last year due to a planned heavy maintenance event and the purchase of additional parts and services to improve reliability.”
Pflieger said Island Air continues to negotiate with its pilots union on concessions after reaching agreements with its two other main labor groups.
“We remain hopeful that we will be able to reach a mutually acceptable agreement that will allow us to move forward and grow our airline,” he said.
Pflieger said there is no timetable yet for when Island Air can become profitable.
”Our entire team is intensely focused on successfully restructuring the airline so it can better compete against a much larger carrier (Hawaiian Airlines), and those efforts are already producing positive results,” he said. “On a year-to-date basis, we continue to see improved performance in all areas of the company compared to last year.”