Island Air says it will cut 20 percent of its workforce as it consolidates operations in Hawaii.
The cuts were announced in a letter to employees and customers from company CEO Dave Pflieger. The airline cited record financial losses of more than $21 million last year alone.
“Of course, we always knew that to remain Hawaii’s number two airline in the face of overwhelming competition from another local airline, which is 60 times our size in revenue and controls nearly 90 percent of the intra-island market, would not be without its challenges,” Pflieger explained. “That is why we have worked so hard together over the past seven months to invest in and improve our operation and give our airline the best chance possible to pursue a different course of action.”
He says the company needs to fix its cost and revenue structure to be able to grow, and outlined the following changes:
- Not taking delivery of any new aircraft in the short term, including the Bombardier Q400 aircraft;
- Closing operations in Lihue, adding flights to Maui, and reducing its overall flight schedule to just two lines of flying;
- Reducing staff by 20 percent.
Impacted employees will be notified in a few days with exit dates beginning in June.
“In our meetings with union leaders over the past 30 days, we asked for modest changes in all collective bargaining agreements,” Pflieger said. “To be clear, we did not ask for job cuts, wage reductions, or benefit or retirement concessions. Instead, we simply asked for changes that would improve productivity and provide certainty on costs during a ramp-up period of growth when we expected to lose money-as many “turnaround” or “start-up” businesses do-especially when they are competing against strong, entrenched incumbents.”
Pflieger said one union was willing to work with the airline and discuss the requests, but the others were not.Click here to view the letter from Island Air CEO Dave Pflieger.