Indiana-based Republic Airways is now a 50% owner of interisland carrier Mokulele Airlines. Republic converted a significant portion of an $8 million loan made to Mokulele on March 18 and invested additional equity into the Kona-based airline in exchange for a 50% stake in the company.
"We are very pleased we were able to successfully recapitalize our airline thanks to Republic Airways," said Bill Boyer, who will step down as Mokulele's CEO and president, in a statement. "They've been a terrific partner, and their continued support will allow us to realize our dream of nurturing and growing our young airline.
"We are extremely grateful for how well the people of Hawaii are responding to and supporting Mokulele's new jet service, and we want to do all we can to keep travel options open and fares affordable for everyone."
The $8 million was part of an October 2008 service agreement in which Republic provided Mokulele with four Embraer 170 jets used for flights between Oahu, Maui, the Big Island and Kauai.
"We believe that the local community needs convenient, affordable air service between neighboring islands," said Bryan Bedford, CEO of Republic Airways, in the same statement. "Republic's investment in Mokulele gives it greater financial strength and positions it to compete effectively and continue to grow its expanding base of loyal interisland customers."
Last month Mokulele nearly defaulted on the $8 million loan after falling behind on the payments. Mokulele employees agreed to defer their paychecks, enabling the airline to make a payment to Republic.
Republic Airways executive Scott Durgin will serve as Mokulele's interim CEO and president while the company conducts a search for a new senior executive. Boyer will take over Mokulele's sales and marketing department.
In other Mokulele news, the carrier announced March 24 that it would begin service between Honolulu and Hilo beginning May 1. An introductory $35 one-way fare is being offered on the airline's website through May 31. Visit www.mokuleleairlines.com.