Hawaii-based Airlines - Mokulele in Default over Payments to Republic

From the Star-Bulletin:
http://www.starbulletin.com/news/breaking/39755213.html

Bryan Bedford, chairman, president and chief executive of Republic, said in an earnings conference call today that Mokulele has fully drawn its $8 million line of credit and that Mokulele has exceeded that amount by about $300,000 under their airline services agreement.

"If the default does not clear by the close of business tomorrow, we will assume control of our collateral," Bedford said.

Mokulele says they are working to acquire additional capital and doesn't think they're going to shut down tomorrow, but we'll see whether they're successful in coming up with the needed resources to keep them flying.

From the Star-Bulletin:
http://www.starbulletin.com/news/breaking/39755213.html



Mokulele says they are working to acquire additional capital and doesn't think they're going to shut down tomorrow, but we'll see whether they're successful in coming up with the needed resources to keep them flying.

I thought one of the required steps in running an airline is to operate in the red.

What's another .3 million, the car makers want billions!

From the article:
Republic said late yesterday that it hopes “the current owners will be successful in their efforts to recapitalize the airline,” but if not, it will assume responsibility for the continuation of jet service.
So it looks like Mokulele will keep flying in one form or another...

From the article:

So it looks like Mokulele will keep flying in one form or another...

This is not trivial or technical. It is quite serious for Mokulele. I hope that they are able to continue as before.

This is not trivial or technical. It is quite serious for Mokulele. I hope that they are able to continue as before.
Not meant to make it trivial or technical; merely pointing out that service disruptions aren't necessarily a dire issue here.

I hope Mokulele and/or Republic can make it work. HA needs some ethical competition and go! needs its comeuppance. I saw the spiffy new planes in HNL recently and hope to ride one to ITO someday.

My "way out there" prediction is that if Mokulele can't keep up on their payments either now or in the near future, then Republic would seize control of the operation (as has been mentioned by slippahs) and they'll continue the services just long enough for them to make a quiet exit from the interisland market and reposition their planes back on the mainland.

Who knows? Best of luck to them.

My "way out there" prediction is that if Mokulele can't keep up on their payments either now or in the near future, then Republic would seize control of the operation (as has been mentioned by slippahs) and they'll continue the services just long enough for them to make a quiet exit from the interisland market and reposition their planes back on the mainland.

Who knows? Best of luck to them.

Not sure they have anyplace to reposition them to on the mainland - I kinda thought that was why they sent them to Hawaii, no better use suggesting itself.

Well, Mokulele paid their $300k and they're out of default for the time being.

http://www.honoluluadvertiser.com/article/20090218/BREAKING03/90218119

Mokulele Airlines has received a reprieve today.

Bill Boyer, Mokulele's chief executive officer, said today it made a $300,000 payment this morning to its partner Republic Airways to avoid default on an $8 million loan.

Indianapolis-based Republic said yesterday that Mokulele had until the end of business today to make the payment or face a potential takeover.

Boyer said that employees agreed to defer paychecks until next week to help the company make its interest payments.

Over the longer term, Boyer said the company is holding talks with outside investors. He said Mokulele may hold a private placement to attract new capital.

Republic has provided daily interisland service under the Mokulele brand since November under a wet-lease agreement in which it provides the aircraft and crew to Mokulele.

The deal, which partially filled the void left by the March 31, 2008 shutdown of Aloha Airlines, called for Republic to provide at least three 70-seat Embraer 170 jets and an $8 million line of credit.

Bold emphasis mine. Sad for the employees.

Well, the situation isn't quite over yet...
http://www.forbes.com/feeds/ap/2009/02/18/ap6068505.html

Mokulele has another $291,000 payment due Friday 2/20/09. With the grace period of 5 days, Boyer better pay up by the middle of next week.

My take is that Boyer negotiates for the deferment or cancellation of the 4th E-170 and just sits it out with 3 jets for the time being. I don't know where he is going to find investors to sink their money in this sinking ship...what's the old saying, if you want to make millions in the airlines...simply invest a billion or something like that.

I don't know where he is going to find investors to sink their money in this sinking ship...
On their website, of course. Didn't you see their link to invest in Mokulele? :D

http://www.mokuleleairlines.com/

On their website, of course. Didn't you see their link to invest in Mokulele? :D

http://www.mokuleleairlines.com/

Ah! I did not see that. :D

That email address should be "save_us@mokuleleairlines.com" instead of "invest@mokuleleairlnes.com". ;)

With an upcoming trip on this airline, I hope they receive good news today.

What is it with me and inter-island flights? Last visit to HI I never got to fly on AQ because they went under before I could take my ticketed flight...

Well, the situation isn't quite over yet...
http://www.forbes.com/feeds/ap/2009/02/18/ap6068505.html

Mokulele has another $291,000 payment due Friday 2/20/09. With the grace period of 5 days, Boyer better pay up by the middle of next week.

My take is that Boyer negotiates for the deferment or cancellation of the 4th E-170 and just sits it out with 3 jets for the time being. I don't know where he is going to find investors to sink their money in this sinking ship...what's the old saying, if you want to make millions in the airlines...simply invest a billion or something like that.

Actually, it's even worse than that. Next week, they have to come up with that $291,000, pay the employees the $300,000 in deferred wages from this week, plus pay next week's wages.

I don't know how many here have ever had to go to the employees with something like this. It is the last gasp of desparation. They have already tried to get the money every other place they could think of, and failed. It did not suddenly occur to them yesterday that they were in deep financial kim chee. This is also something that only works once.

Interestingly, Republic, which would be the most likely party for Mokulele to get investment/increased loan from, seems to have turned them down cold. Either Republic is convinced that Mokulele is down for the count or Republic wants to push Mokulele over the edge. The latter seems more likely.

It seems like a surge in bookings and a knight in shining armor came through for MW:

http://www.starbulletin.com/business/20090221_Mokulele_pays_staff_raises_291000_owed_to _Republic.html

I would love to know which mainland airline bought those "high dollar" tickets.

It seems like a surge in bookings and a knight in shining armor came through for MW:

http://www.starbulletin.com/business/20090221_Mokulele_pays_staff_raises_291000_owed_to _Republic.html

I would love to know which mainland airline bought those "high dollar" tickets.

And why that mainland airline doesn't want Republic to take over Mokulele.

A couple of things in the article are counter-intuitive. First, "tour" seats normally sell to tour operators at a substantial discount, not at premium prices of $199-$399. And news of financial troubles (raising the possibility that the airline will cease flying) normally does not cause bookings to go "through the roof".

Not sure we are getting the entire story here.

Not sure we are getting the entire story here.

I'm sure we're not.:D

It seems like a surge in bookings and a knight in shining armor came through for MW:

http://www.starbulletin.com/business/20090221_Mokulele_pays_staff_raises_291000_owed_to _Republic.html

I would love to know which mainland airline bought those "high dollar" tickets.

More than likely, Alaska Airlines.

More than likely, Alaska Airlines.
Why didn't I think of that? Given their recent entry into the Hawaii market and lack (AFAIK) of an interisland alliance, it makes perfect sense. Paying high dollar for the tickets could be an investment in future possibilities rather than the best deal to be had at the moment, which it is definitely not.

"People have been calling us and asking how they can help, and a lot of people in the community and local travel agencies have been buying a lot of advance tickets and also tickets for same day of travel,"

That seems odd to me. I get most of my local news via my folks these days, so I'm kinda out of touch, but it seems like a lot more people care about Mokulele than Mid-Pac or Mahalo when they were in trouble. What's different about this airline? Is it the ex-Aloha folks they hired? Are these just friends and family trying to help?

Why didn't I think of that? Given their recent entry into the Hawaii market and lack (AFAIK) of an interisland alliance, it makes perfect sense. Paying high dollar for the tickets could be an investment in future possibilities rather than the best deal to be had at the moment, which it is definitely not.

Well they also have a bit of a partnership with the earning AS miles on Mokulele flights. On top of that, an AS exec was spotted with Bill Boyer at a hawaii travel agent orientation hosted by Mokulele less than two weeks ago.

"People have been calling us and asking how they can help, and a lot of people in the community and local travel agencies have been buying a lot of advance tickets and also tickets for same day of travel,"

That seems odd to me. I get most of my local news via my folks these days, so I'm kinda out of touch, but it seems like a lot more people care about Mokulele than Mid-Pac or Mahalo when they were in trouble. What's different about this airline? Is it the ex-Aloha folks they hired? Are these just friends and family trying to help?

It is odd, and I'm extremely suspicious of this reported news.

Why didn't I think of that? Given their recent entry into the Hawaii market and lack (AFAIK) of an interisland alliance, it makes perfect sense. Paying high dollar for the tickets could be an investment in future possibilities rather than the best deal to be had at the moment, which it is definitely not.

Buying equity is an investment. Executing a loan is an investment. Buying tickets wholesale at 6 to 12 times retail pricing is not an investment.

I can believe that Alaska (or another airline) would choose to invest in Mokulele (via equity or loan). I have a hard time swallowing them buying lots of $199-399 tickets, though. I just can't think of why they would do that, especially since they would have to write those tickets down immediately to industry wholesale pricing, say $25, and recognize the difference as a loss this month.

its for their Circle Island Tour on the Big Island. And its not Alaska.

I'm hearing from my source at Moku that they are a few weeks away from announcing *another* partnership with a big carrier... I tried to get it out of him but he only said "you can go east or west from here on them", so its United, Northwest, or Continental.

More than likely, Alaska Airlines.

Why didn't I think of that? Given their recent entry into the Hawaii market and lack (AFAIK) of an interisland alliance, it makes perfect sense. Paying high dollar for the tickets could be an investment in future possibilities rather than the best deal to be had at the moment, which it is definitely not.

Well they also have a bit of a partnership with the earning AS miles on Mokulele flights. On top of that, an AS exec was spotted with Bill Boyer at a hawaii travel agent orientation hosted by Mokulele less than two weeks ago.



It is odd, and I'm extremely suspicious of this reported news.

its for their Circle Island Tour on the Big Island. And its not Alaska.

I'm hearing from my source at Moku that they are a few weeks away from announcing *another* partnership with a big carrier... I tried to get it out of him but he only said "you can go east or west from here on them", so its United, Northwest, or Continental.

AS does have enough cash on hand... and its stock is doing pretty good too... and I'm hitting KOA (Via AS of course :D) in June so it'd be nice to book from AS the KOA-KOA flight... but I'd think MW would need more of a partnership besides just AS, (unless it was QX and they are slowly moving in to take over MW - now that was just a dream but would be fun for me :p)

I honestly thought that it was Alaska Air since you can get miles on Alaska Air when you fly with Mokulele. It would be nice to find out exactly what is going on though. On a more personal note, I have friends in HNL with Shuttle America and I have even thought about transferring out there, but I won't do it until I feel a little bit of stability. God knows that moving from the mainland wouldn't be cheap so I would want a long term investment.

I honestly thought that it was Alaska Air since you can get miles on Alaska Air when you fly with Mokulele. It would be nice to find out exactly what is going on though. On a more personal note, I have friends in HNL with Shuttle America and I have even thought about transferring out there, but I won't do it until I feel a little bit of stability. God knows that moving from the mainland wouldn't be cheap so I would want a long term investment.

Honestly. for Mokulele's sake, I hope that it is an airline with more mainland capacity than a handful of 738's per day (not at all slamming AS)!

It seems like a surge in bookings and a knight in shining armor came through for MW:

http://www.starbulletin.com/business/20090221_Mokulele_pays_staff_raises_291000_owed_to _Republic.html

I would love to know which mainland airline bought those "high dollar" tickets.

Maybe Alaska or West Jet?

For those Hawaiians out there, I know this is purely speculation, but if you were me, would you book a direct flight on Mokulele in June from OGG to KOA? Or would you just book on HA connecting through HNL? I need to leave in the evening and it looks like HA has a pretty limited direct schedule.

Fyi, I have copied over your post and responses to it to a new standalone thread

http://www.flyertalk.com/forum/hawaii-based-airlines/931843-would-you-fly-mokulele-ha-ogg-koa-june.html

cblaisd
Co-Moderator, Hawai`i-based Airlines forum

Republic CEO Bryan Bedford was in the news and stated they would keep flying if Mokulele defaulted. I guess they need a home for the planes, afterall.