On December 12, 2003, about 1300 Alaska standard time, a Piper PA-32-260 airplane, N3983W, sustained substantial damage following a loss of engine power while maneuvering, and subsequent ditching in Larson Bay, about 5 miles south-southeast of the Larson Bay airstrip, Larson Bay, Alaska. The airplane was operated by Island Air Service, of Kodiak, Alaska, as a visual flight rules (VFR) cargo flight under Title 14, CFR Part 135, when the accident occurred. The solo airline transport pilot was not injured. Visual meteorological conditions prevailed, and company VFR flight following procedures were in effect. The flight departed Kodiak about 1230. During a telephone conversation with the National Transportation Safety Board (NTSB) investigator-in-charge (IIC) on December 12, the chief pilot for the operator reported the pilot said he was over the bay headed for the Larson Bay airstrip, when he encountered a snow squall. During the ensuing 180 degree turn away from the squall, the engine quit. The pilot said after switching fuel tanks, and an attempt to restart the engine, the airplane was too low to glide to the shoreline, and he ditched the airplane in the bay. The chief pilot said there were no known mechanical anomalies prior to the loss of engine power, and that the airplane has not yet been recovered from the bay. In a written statement to the NTSB dated December 29, and a telephone conversation with the NTSB IIC on December 30, the pilot reported that he departed Kodiak with 64 gallons of fuel onboard (17 gallons in each tip tank, and 15 gallons in each main tank), using the right main tank for the first leg of the approximately 170 mile round trip from Kodiak to Larson Bay, to Karluk, Alaska, and return to Kodiak. He said about 30 minutes into the flight, and about 5 miles south of the Larson Bay airstrip, he flew into a snow squall. He said he descended to 500' msl over the water of Larson Bay to maintain visual reference to the ground, and then initiated a steep 180 degree left turn because he knew rising terrain lay ahead. He said during the steep turn the engine quit, and he rolled out on the reverse heading, switched fuel tanks, and attempted to restart the engine. The restart was unsuccessful, and he ditched the airplane in the relatively calm water of a cove. The ditching was witnessed by the crew of a fishing boat who picked up the pilot. The airplane was recovered, and the engine successfully run by maintenance personnel.