Mahalo Air cuts back
on flights, plans layoffs

By Russ Lynch
Star-Bulletin

Mahalo Air took two of its seven aircraft out of service today, decreased its flight schedule and plans to layoff some employees to cut costs.

"We're reducing the flight schedule to conserve costs because of a dispute with the aircraft leasing company," said Mike Yocum, Mahalo president.

Yocum said many Mahalo flights are within 30 minutes of each other and it was possible to reduce that frequency.

The schedule reduction will also mean some layoffs, Yocum said. Layoffs will be throughout the company and details are being worked out, he said. The airline employs about 300.

Mahalo filed a Chapter 11 bankruptcy petition July 25, keeping creditors at bay while it attempts to resolve the leasing dispute. Mahalo uses 44- to 46-seat ATR-42 propjet planes.

Chapter 11 of the federal bankruptcy laws allows a company to keep operating but holds off creditors while it reorganizes.

The airline had trouble meeting its schedules because of trouble with engines in the ATR-42s and has been fighting with the manufacturer over that.

"Our loads have actually increased," Yocum said. "Had we not experienced reliability problems early this year with the aircraft we'd be making money now," Yocum said.

Although the privately held company did not want to go into bankruptcy, he said, "now we're there, we have no choice but to control our expenses."

Running at lower fares than competitors Hawaiian Airlines Inc. and Aloha Airlines, Mahalo says it has played a significant role in holding down the cost of interisland travel.

Owned by a group of mostly local partners, headed by Robert Iwamoto, Mahalo began flying in the fall of 1993.

Its bankruptcy filing showed assets of $3.7 million and liabilities of $13.5 million.