Alpine Air, which was subcontracted to deliver U.S. mail to several of the neighbor islands, said it will lose 18 percent of the company's gross revenue after its contract was not renewed.

Mail delivery to Kamuela on the Big Island; Lanai; Lihue, Kauai; and Molokai will now be done by Billings, Mont.-based Corporate Air, which has the contract with the U.S. Postal Service and had been subcontracting the work to Alpine Air.

Corporate Air currently flies for FedEx between the islands.

“;We've been over there since 1987, and we just decided to increase our base a little bit,”; Corporate Air President Linda Overstreet said.

Alpine Chief Executive Gene Mallette, whose company delivered less than 20 percent of the interisland mail, said he was “;saddened”; at leaving Hawaii, but that Alpine would mitigate the loss by redeploying aircraft to other operations and leasing certain aircraft to other operators.

The company, which had been in Hawaii for five years, said it is focused on expanding its services and clients in states such as North Dakota, South Dakota, Montana, Nebraska, and Colorado.

Aloha Air Cargo is the main interisland mail carrier, serving Hilo, Kona and Maui.

Last year, the U.S. Postal Service activated an emergency contract with Corporate Air that had been arranged in advance when Aloha Air Cargo shut down for three days as the result of a pilot walkout during Aloha's bankruptcy.

Alpine, based in Provo, Utah, said the loss of the Hawaii contract gives it the opportunity to restructure a portion of its business.

“;(It) could ultimately result in a capital gain for the company and our shareholders,”; Mallette said.