Mokulele Airlines got a reprieve yesterday.

Bill Boyer, Mokulele's chief executive officer, said the company made a $300,000 payment yesterday to partner Republic Airways to avoid default on an $8 million loan.

Indianapolis-based Republic said Mokulele had until the end of business yesterday to make the payment or face a potential takeover.

Boyer said employees agreed to defer paychecks until next week to help the company make its interest payments.

Over the longer term, Boyer said, the company is holding talks with outside investors. He said Mokulele may hold a private placement to attract new capital.

Republic has provided daily interisland service under the Mokulele brand since November under a wet-lease agreement in which it provides the aircraft and crew to Mokulele.

The deal, which partially filled the void left by the March 31, 2008, shutdown of Aloha Airlines, calls for Republic to provide at least three 70-seat Embraer 170 jets and an $8 million line of credit.

In a conference call with investors Tuesday, Republic CEO Bryan Bedford said his company had no plans to shut down the airline.

But he said Republic could take over the local carrier's unencumbered assets along with stock held by the company's majority shareholders if the payment had not been made by yesterday.

Mokulele, based in Kona on the Big Island, has been flying in the Islands since 1998. It currently operates 85 daily flights. It launched jet service last fall with 14 flights a day between Honolulu and Lihu'e, Kaua'i and Kona, using jets operated by Republic. On Feb. 1 it added jet service to Kahului.

Founded in 1973, Republic is a regional carrier with about 4,500 employees. It operates regional service on the Mainland for major carriers such as United, American and Continental.