Hawaii Island Air has said it will file for chapter 11 bankruptcy protection in an effort to continue normal operations while navigating through legal challenges recently presented by the lessors of its aircraft.
The bankruptcy filing was caused by threats of legal action to ground the aircraft and strand hundreds of passengers, the airline said in a statement.
The filing prevents the threatened action and allows Island Air to continue inter-island service for its customers.
During the reorganisation process, Island Air expects to fly its scheduled routes as normal and honour all previously purchased tickets and confirmed reservations.
On October 12th, while in the process of negotiating its aircraft leases with its lessors, Island Air was “very surprised” lessors served notices of termination of the leases and demands to surrender its airplanes.
Prioritising its customers, employees and the communities it serves, Island Air made the difficult decision to file for bankruptcy protection, added the statement.
Continuing to operate under the protection of the United States Bankruptcy Court will allow Island Air to maintain its service to its customers.
“Island Air will continue to hold our customers and employees, as well as our invaluable vendors, as our main priorities during this reorganisation process,” said David Uchiyama, Island Air president.
“Once we have completed the reorganization process, Island Air expects to emerge as a stronger airline with a solid financial structure that will allow us to continue to meet the demands of Hawai‘i’s dynamic interisland market, while positioning us for future growth and expansion.”
In January 2016, Hawai‘i-based investment company PacifiCap acquired controlling interest in Island Air from Ohana Airline Holdings, which is wholly owned by Oracle corporation founder Larry Ellison.
Since that time the airline has been focused on improving operations, increasing efficiencies and elevating service to customers.
This has included strategic investments in equipment and supplies, including upgrading its aircraft fleet, as well as expanding training and resources for employees.