Mokulele defers delivery of fourth E-170

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Hawaiian inter-island operator Mokulele Airlines has postponed delivery of its fourth Embraer E-170 due to the economic downturn and poor tourism figures.

Mokulele was to take delivery of the 70-seater earlier this year as part of a deal inked last October with Republic Airways Holdings for Republic subsidiary Shuttle America to operate four aircraft on inter-island routes.

Mokulele does not plan to add the fourth aircraft before next summer unless there is a "catastrophic change to the landscape", Mokulele CEO Scott Durgin tells ATI.

Durgin, a senior executive at Republic, originally took the helm at Mokulele on an interim basis but says he will now maintain the Mokulele post.

When the economy recovers and the airline decides to expand, fleet growth will revolve around the E-170, which Durgin says has more seat pitch and larger overhead bins than the aircraft operated by its competitors. Hawaiian Airlines flies Boeing 717s on its interisland routes while the Mesa Airlines go! subsidiary operates 50-seat Bombardier CRJ200s in Hawaii.

Mokulele has forecasted a scenario where it would operate six E-170s on the interisland market, Durgin says.

But he cautions: "There is long-term forecast. [We will] provide lift as opportunities present themselves."

Republic's aircraft deal with Mokulele was in conjunction with an $8 million loan to the Hawaiian carrier. Republic converted that loan into an equity stake this March, and after recently investing an additional $7.5 million in Mokulele, Republic's stake jumped to 89%.

Republic's total investment in Mokulele is now under $20 million.