HONOLULU, HI - The parent companies of go! and Mokulele airlines entered into an agreement today to combine the two interisland carriers.

Under the terms of the merger deal, go! parent Mesa Air Group will own 75 percent of the company and Mokulele shareholders will own 25 percent.

There was no immediate word on if the deal will lead to layoffs.

But Scott Durgin, chief executive of Mokulele Airlines, said, "We are jointly taking a close look at how we can create greater efficiencies in the combined operation and deploy our workforce in ways that make for a viable second airline. We are working very hard to preserve every job."

About 40 percent of Mokulele's roughly 160-person workforce are former employees of Aloha Airlines, which went out of business in spring 2008.

Passengers can continue to book travel on both carriers and existing reservations will be honored, the companies said today, adding that customers will check in at the co-branded go! Mokulele ticket counters. The merger is effective Thursday.

As part of the deal, Mokulele shareholders will fund up to $1.5 million to capitalize the merged company. Republic also will forgive Mokulele's $3.1 million in debt to Republic, the company said.

"During this period of economic stress within our industry, it is especially important to closely match capacity with demand, and this arrangement allows Mokulele to right-size the aircraft within its network," Bryan Bedford, chairman, president and CEO of Republic Airways, said in a statement.

Mokulele majority owner Republic Airways Holdings said under the merger, Mokulele's three 70-seat Embraer 170s routes will be transitioned to jet service provided by Mesa Airlines. The three E-170 aircraft will be returned to the mainland by November to operate in Republic Airways' branded network. Mokulele began offering the jet service last November.

Indianapolis-based Republic Airways is a holding company that owns Chautauqua, Frontier, Lynx Aviation, Midwest, Republic and Shuttle America airlines.

Phoenix-based Mesa Air Group Chairman and CEO Jonathan Ornstein said, "This strategic alliance in partnership with Mokulele is a first among regional airlines and will provide a tremendous platform for the future growth of the go! and Mokulele brands."

Copyright 2009 starbulletin.com. All rights reserved. From http://www.starbulletin.com. By Star-Bulletin staff.
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