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Young Bros. pared schedule extended

PUC grants request to extend to August as company cuts costs

The Young Brothers tug Kapena Bob Purdy and barge Maka‘ala are tied up alongside Kahului Harbor’s Pier Two on Tuesday morning. The $20 million Kapena Bob Purdy was put into service last year. The company was recently given permission to extend its modified shipping schedule — which it reduced earlier this year to cut costs — through Aug. 17. The Maui News / MATTHEW THAYER photos

Young Brothers has been granted permission to extend its reduced sailing schedule through Aug. 17, one of several cost-cutting measures that the company has taken in the wake of mounting losses.

The Public Utilities Commission approved Young Brothers’ request Friday, the same day the state Legislature adjourned without a decision on whether to bail out the company with federal CARES Act funds.

“We know families, businesses and communities depend on our specialized services that connect Hawaii’s island economies,” Young Brothers President Jay Ana said via email Tuesday. “We are doing all we can to provide uninterrupted service for customers at all ports and continue moving what matters most to our communities safely and efficiently.”

Young Brothers has forecast $25 million in losses this year, citing a decline in cargo volumes and higher operating expenses that have been worsened by the pandemic.

To cut costs, the company sought to reduce trips between ports, a request that the PUC approved in May and extended again in June. The latest schedule approved through Aug. 17 for Maui and Hawaii counties will be as follows:

Stacks of containers are seen at Kahului Harbor on Tuesday

• Two weekly trips from Honolulu to Kahului on Monday (arriving Tuesday) and Thursday (arriving Friday)

• Two weekly trips from Honolulu to Molokai’s Kaunakakai Harbor on Tuesday (arriving Wednesday afternoon with cargo available Thursday) and Saturday (arriving Sunday with cargo available Monday)

• One weekly trip from Honolulu to Lanai’s Kaumalapau Harbor on Tuesday (arriving Wednesday morning)

• Two weekly trips from Honolulu to Big Island’s Kawaihae on Monday (arriving Tuesday) and Thursday (arriving Friday)

• One weekly trip from Honolulu to Hilo on Saturday (arriving Monday)

Besides reducing its sailing schedule, Young Brothers has also reduced gate hours for nonbarge days in all major ports, instituted a hiring freeze and salary cuts for senior leadership, suspended nonessential travel, eliminated discretionary expenses and deferred nonessential maintenance and related activities, according to PUC documents.

“Cost-saving measures have yielded some measurable results, but nearly two-thirds of Young Brothers’ operating expenses are fixed,” Young Brothers said via email.

That means the bulk of costs for things like employee labor, rent and utilities stay the same regardless of customer demand and cargo volume.

“That makes cost-cutting our way out of the current financial challenges essentially impossible,” the company said.

Young Brothers said the loss forecast of $25 million accounted for the impact of cost-saving measures.

The PUC approved the extension of the reduced sailing schedule with the condition that Young Brothers offer “a robust analysis of alternatives . . . that would seek to address YB’s cost concerns but also move towards restoration of the pre-COVID sailing schedule.”

When asked what Young Brothers was doing to ease the impacts on Neighbor Island customers, Ana said that the company tried to set its schedule based on the needs of local farmers and others in the community.

“We listened and worked with our customers and elected officials to adjust the sailing schedules to Hilo and Molokai, ensuring we can best serve the needs of local farmers, and all of Hawaii island, in these challenging times,” Ana said.

When asked about whether customers should be concerned about the company going out of business, Ana responded that “we are committed to serving our customers as long as we can while we pursue every avenue of assistance.”

“Ultimately, the people of Hawaii should know that our top priority is finding real solutions to ensure uninterrupted service to all of the communities we serve,” he said.

Earlier this month Young Brothers asked the PUC for an emergency rate increase of about $30 million, or a 47 percent general rate hike.

State Sen. Gil Keith-Agaran, vice-chairman of the Senate Ways and Means Committee, said Friday on the final day of the Legislature that lawmakers would be monitoring the situation, but that they wouldn’t have much control if Young Brothers went into bankruptcy.

Senate Majority Leader J. Kalani English, whose district covers East Maui, Molokai and Lanai, added that “we’ll be keeping a close eye on this and we’ll be seeing what the executive does in the interim to see if they can help shore them up . . . and also how the company reforms itself and creates a better management plan.”

* Colleen Uechi can be reached at cuechi@mauinews.com.

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