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.
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!
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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...
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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.
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.
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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.
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.
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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...
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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.
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