An ATR 72 flown by Island Air from March 2013 to September 2017.
To say that the past year at Island Air has been tumultuous would be a gross understatement. The airline started 2017 on a positive footing. The pilots and management reached agreements that would allow the company to expand while maintaining necessary revenue. The first of five new Dash 8-Q400s arrived in January. Pilots were being hired to fly those airplanes, and pilots currently on the seniority list were looking forward to upgrades and transitioning from ATR 72s.
However, financial circumstances started to worsen in late spring. “To be successful, the company needed aircraft, pilots trained to fly them, and a revenue stream to pay for it all,” said Capt. Jim Morris, the pilots’ Master Executive Council (MEC) chairman, at ALPA’s fall Executive Board meeting. “Unfortunately, since the refleet started, we had at best only two out of three of these items at any given time.”
These problems culminated in a Chapter 11 bankruptcy filing on Oct. 15, 2017. Lack of capital and financial liquidity quickly led from Chapter 11 reorganization to Chapter 7 liquidation, forcing the airline to officially shut its doors on November 10. To this date, Island Air employees are still unable to transfer their 401(k) accounts, and wages earned in November remain unpaid.
At the beginning of 2017, employees were optimistic regarding plans to potentially double the number of pilots; however, the company began to fall short of revenue expectations. In 2013, the airline went down a similar financial path when software billionaire Larry Ellison bought the airline primarily to shuttle guests from Oahu to his upscale resorts on the island of Lanai. Unfortunately, Ellison’s managers abandoned virtually all of the carrier’s other routes, and the company racked up huge losses.
Former CEO Paul Casey’s plan to replace the airline’s fleet of ATR 72s was abandoned, leaving a pair of new, custom-ordered Bombardier Q400s sitting unused in an Arizona hangar, even though some of the pilots had already been trained to fly them. New management tried to back away from the pay raises it had promised in the letter of agreement that brought the new aircraft onto the property, and grievances started to pile up.
In January 2016, Ellison sold a majority interest in the airline to a group of local investors. Three months later, CEO David Uchiyama was hired and began mending fences with employees. Improved relations with the company led to a contract extension that increased pilot pay while favorably settling all grievances and pending arbitrations. Island Air had the fifth-highest starting pay among the 18 regional carriers operating in the U.S.
Despite Herculean efforts by the pilots and all employees, events outside their control culminated in Island Air closing its doors in November. The last round-trip flight between Oahu and Maui was bittersweet for the pilots and other employees. It was met by family, friends, and supporters who chose to celebrate Island Air’s 37 years despite the sad circumstances.
Since the announcement of the shutdown, the MEC has remained engaged with ALPA’s national officers and staff to assist pilots. “The one bright aspect to all of this is the overwhelming support we’ve received from ALPA and airlines in getting our pilots placed at other carriers,” said Morris. “In addition, the response to the entire Island Air family by local employers has been amazing, and we’re all extremely grateful.”
In yet another unexpected twist, at the last possible moment Hawaiian Airlines agreed to provide capital to fund the bankruptcy while it negotiated the purchase of the airline. Events continued to unfold as this issue went to press, and the final chapter in this long saga remains unwritten.
ALPA’s Legal Department and Morris, the pilot group’s custodian, are continuing to work to ensure that the pilots receive the wages they earned prior to the airline’s shutdown, pilot placement successes continue, and their interests remain paramount as the potential sale of the airline operating certificate develops.