NEWS RELEASE: Young Brothers seeks financial relief from the State due to COVID-19 slowdown
News Release from Young Brothers, May 26, 2020 (With accuracy-inducing notes in parenthesis.)
Young Brothers, LLC (YB) today announced it is seeking assistance from the Hawai‘i legislature and Public Utilities Commission (PUC) to alleviate an impending cash crisis brought on by a 30% drop in cargo volumes due to the COVID-19 pandemic. The interisland shipping company reported losing nearly $8 million through April and projects mounting losses totaling approximately $25 million by the end of the year.
(Editor's Note: YB's fraudulent accounting was exposed by the State Consumer advocate in response to YB's 2017 rate hike request. This is just a rehash of the same old trick. See: LINK.)
In a letter filed with the PUC on Tuesday, 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 CARES Act funding from the state legislature to sustain operations through December, 2020.
(Editor's Note: Cut off by parent? Not! Actually YB has been steadily milked by Saltchuck--which is an unregulated trans-oceanic carrier--creating artificial losses in order to justify a PUC rate hike request for YB's regulated inter-island routes. See LINK.)
“Until now, our parent company has graciously and generously covered our losses,” said Jay Ana, president of Young Brothers, LLC (without even snickering). “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 Hawai‘i – 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.”
Impact of COVID-19 Pandemic
Young Brothers cargo volumes dropped 30 percent following government stay-at-home orders and a steep decline in tourism. Last month, it announced key measures to streamline operations and reduce operating costs, including:
– Reduced sailing schedules for Maui and Hawai‘i 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
– 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.
(Reality -- The state consumer advocate has already exposed this trick. LINK.)
“The mounting losses at Young Brothers are more than any parent company can absorb,” said Jason Childs, chairman of Young Brothers’ board of directors (without laughing out loud). “We’re in a shared crisis that is far from over and are losing more than $3 million a month. This is not sustainable.”
(Translation: YB is absorbing operating costs for Saltchuck's unregulated services. LINK. This is a standard accounting trick for companies that are partly regulated and partly unregulated. They are laughing at you because they think you are too dumb to understand the trickery. Are they right about you? Will you give them $25M? SA: Several Politicians Fooled by YB Claims)
If unable to secure 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.
(Translation: YB is using this as an excuse to eliminate services that they have been trying to eliminate for a long time. They want to be the regulated monopoly and eat the monopoly profits too. This entire exercise is directed at the current PUC rate hike request which isn't going too well because it is based on the same debunked numbers as their 2017 request.)
“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 Hawai‘i beyond 2020 and into the future.”
Contingency Plans (below)
Continuity of Operations
“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.
Young Brothers will not make further adjustments to the sailing schedule at this time; however, the contemplated additional sailings requested by Moloka‘i and Hilo farmers will not be reinstated.
Likewise, the company will seek permission from the PUC to not resume the LCL and Mixed Cargo service lines, as previously planned, except as described above.
Accommodations for Moloka‘i, Lāna‘i & Livestock Industry
Ana continued, “After June 8, Young Brothers is committed to continue providing the specialized services and delivering the gas, groceries, and other critical supplies that Moloka‘i and Lāna‘i need to survive and thrive.”
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, 2020.
Regulatory Relief from the PUC
You may download a copy of YB’s letter filed today with the PUC at this link.
In 2019, Young Brothers’ filed a request with the PUC to increase its rates to offset rising operating costs and pre-COVID estimated losses of approximately $13 million. It remains pending further action by the PUC.
Additional Information and Resources
Reality: Young Brothers Rate Hike Proposal Based on Fraudulent Numbers
TGI January 18, 2020: …In January 2019, the commission approved a 4.3% rate increase, but that figure was less than a third of the 13.3% Young Brothers originally asked for in December 2017.
The shipping company was forced to accept a lower rate after the Consumer Advocacy Division of the Department of Commerce and Consumer Affairs found discrepancies in the figures used to justify the proposed price hike, according to documents filed online with the Public Utilities Commission.
The consumer advocate then launched an investigation of Young Brothers, and found that its application for a rate increase was based on figures that made it appear as though the company was in a worse financial position than it was.
According to the agreement, the company reached with the consumer advocate for the 2019 rate increase, Young Brothers representatives underestimated potential earnings and overestimated costs by millions of dollars….
read … Young Brothers Rate Hike Proposal Based on Fraudulent Numbers
PUC: YB 2017 Rate Hike Docket
SA: Several Politicians Fooled by YB Claims