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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowMokulele Airlines yesterday said it made a $300,000 loan payment, staving off seizure of its assets and operations by business partner Republic Airways Holdings Inc.
Mokulele had defaulted on an $8 million loan, and Indianapolis-based Republic said it would come in and operate Mokulele if the Hawaii carrier failed to make the payment by the close of business yesterday.
Bill Boyer, Mokulele’s president and chief executive, said he made the payment in the morning and was working to clear up the financial situation with new capital and investors.
But the carrier still isn’t in clear skies yet. Mokulele’s next payment for $291,000 is due tomorrow. A five-day grace period extends the deadline to the middle of next week.
“We might stretch that out a couple days, but we’re just trying to get organized and get more funding in this company,” Boyer said.
It is also facing a sharp decline in tourism resulting from the global recession.
Some of 180 Mokulele employees have even voluntarily offered to defer tomorrow’s scheduled paychecks a few days to aid the company.
“So they gave us some extra time, if we needed it. That’s pretty cool,” he said.
If Republic had assumed control of Mokulele, flights would have operated as scheduled. Republic, which provides aircraft and crew to Mokulele, said it would not shut down the carrier.
“It’s tough when you’re a small company,” Boyer said. “We’re ramping up. We bought equipment. To ramp up at other stations, it cost money to do that. Now we’re starting to get some good cash flow with the help of the people, and we’ve started getting calls from potential investors.”
Founded in 1998 as Mokulele Flight Service Inc., the carrier began as a turboprop tour operator. It was acquired by Boyer in 2005 and has quickly added inter-island routes to fill the void left by last year’s shutdown of Aloha Airlines.
Mokulele now operates 85 daily flights.
Boyer said his company is projected to turn a profit as early as the summer, with revenues and passengers counts ahead of schedule. But the carrier has been hurt because it doesn’t have any e-ticketing partnerships. It is currently working on e-ticketing and code-sharing agreements with other airlines.
Boyer said he has the newest and most efficient inter-island fleet in Hawaii. It operates Embraer 170 jets as well as Cessna Grand Caravan 208B propeller aircraft.
“By having those offsets in costs, it enables us to keep our prices down and still make money,” he said.
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