Mokulele Airlines said Republic Airways has become a 50 percent owner in the Kona-based company and that a Republic executive will act as president and chief executive officer as a search for a new executive is conducted.

Under an agreement, Republic converted a substantial portion of an $8 million loan to Mokulele, along with investing additional equity, to receive a half interest in the local carrier.

"We are very pleased we were able to successfully recapitalize our airline thanks to Republic Airways," said Bill Boyer, who is stepping down as head of Mokulele to lead the company's sales and marketing efforts.

Mokulele said Scott Durgin, Republic vice president for strategic alliances, will assume the interim president and CEO role during the executive search.

The ownership move stems from Mokulele's entry into jet service in October using four Embraer 170 jets from Republic Airways. Mokulele's subsequent financial problems led to the recapitalization of the company with Republic taking an ownership position.