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Island Air files for US Chapter 11

Photo: Island Air has ceased operations. Bombardier

 

Hawaiian regional carrier Island Air has filed for Chapter 11 bankruptcy protection after lessor Elix Aviation Capital tried to repossess three of its Bombardier Dash 8-Q400s.

Island Air said it had taken the action in an effort to maintain normal operations while “navigating through legal challenges recently presented by the lessors of its aircraft”.  It said the Chapter 11 filing was caused by threats of legal action to ground its aircraft, which would have resulted in hundreds of passengers being stranded.

“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 and CEO. “Once we have completed the reorganisation 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 Hawaii’s dynamic interisland market, while positioning us for future growth and expansion.”

Island Air revealed it had been in the process of negotiating its aircraft leases with Elix Aviation Capital when it was served with notices of termination of the leases and demands to surrender its airplanes.

The carrier says it expects its schedule to operate as normal during the Chapter 11 proceedings and all previously purchased tickets and confirmed reservations will be honoured.

In January 2016, Hawaiian investment company PacifiCap acquired a controlling interest in Island Air from Ohana Airline Holdings.  Since then Island Air has focused on improving operations and becoming more efficient while raising customer service standards.  The airline has noted a growth in demand that helped narrow its Q1 2017 loss, while in Q2 the carrier recorded its highest quarterly revenue in more than a decade.

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