By Alfred Acenas
EBC Hawaii Bureau
HONOLULU (Eagle News) – Young Brothers, LLC (YB) announced on Tuesday, May 26, that it is seeking assistance from the Hawaii legislature and Public Utilities Commission (PUC) to alleviate an impending cash crisis brought on by a 30% drop in cargo volumes due to the novel coronavirus (COVID-19) pandemic.
The interisland shipping company has reported losing nearly $8 million through April and projects mounting losses totaling approximately $25 million by the end of the year.
In a letter filed with the PUC, Young Brothers described its financial situation as “extremely dire” and indicated the company will no longer receive cash infusions from its parent company as of June 1, 2020.
The company is seeking $25 million in relief funding from the state legislature as appropriated by the Coronavirus Aid, Relief, and Economic Security (CARES) Act to sustain operations through December 2020.
“Until now, our parent company has graciously and generously covered our losses,” said Jay Ana, president of Young Brothers, LLC. “But they are not in a position to continue covering the staggering COVID losses and have told us that we must now find other solutions. We know they have deep aloha for Young Brothers – and for Hawaii – and we are grateful to them for carrying us through the challenging times. But we must now find a cooperative solution with the state that allows YB to continue to operate.”
Young Brothers cargo volumes dropped 30% following government stay-at-home orders and a steep decline in tourism. In April, the company announced key measures to streamline operations and reduce operating costs, including:
- reduced sailing schedules for Maui and Hawaii counties reflecting the decline in volume to Kahului and Hilo, yielding $6 million in savings;
- reduced gate hours for non-barge days in all major ports;
- hiring freeze and salary cuts for senior leadership; and
- suspending non-essential travel, eliminating discretionary expenses and deferring
non-essential maintenance and related activities.
YB’s parent company covered over $21 million in losses from 2018 and 2019 as YB pursued rate relief from the PUC.
“The mounting losses at Young Brothers are more than any parent company can absorb,” said Jason Childs, chairman of Young Brothers’ board of directors. “We’re in a shared crisis that is far from over and are losing more than $3 million a month. This is not sustainable.”
If unable to secure CARES relief, the company will be required to prioritize revenue-generating lines of service to sustain operations. Young Brothers would pursue a phased approach to service modifications. Subject to PUC approval, these changes would begin on June 8 to reduce costs and provide continuity of service for as many customers for as long as possible.
“We hope to avoid any disruption in service,” said Ana. “Support from the state legislature would put the company on solid ground while we seek solutions from the Public Utilities Commission to achieve a more sustainable future for the company. Our goal is to ensure Young Brothers is here to serve all of Hawaii beyond 2020 and into the future.
“The neighbor island communities that rely on Young Brothers can rest assured that we are not closing on June 1. We will serve our customers as long as possible while we pursue every avenue of assistance,” said Ana.
Reflecting the company’s commitment to local ranchers and farmers, Young Brothers announced it is establishing special procedures to continue transporting livestock between the islands after June 8.
Meanwhile, Governor David Ige wrote on Twitter, “The company is part of the state’s critical infrastructure that keeps goods moving to and between the islands. We’ll be considering the request as part of the recovery and resiliency efforts underway.”
Since 1900 and with approximately 370 employees across the state at present, Young Brothers has been providing weekly port calls from Honolulu to the state’s neighbor island ports, including Hilo (Big Island), Kawaihae (Big Island), Kahului (Maui), Kaumalapau (Lanai), Kaunakakai (Molokai), and Nāwiliwili (Kauai). For more information, visit www.youngbrothershawaii.com.
(Eagle News Service)