Island Air files for Chapter 11

victoria@aviationnews-online.com
By victoria@aviationnews-online.com October 26, 2017 16:34

Island Air files for Chapter 11

Last week, Island Air filed for Chapter 11 triggered by legal action from lessors over the airline’s non-payment of lease dues. Island Air states that it was “very surprised” on October 12 when, in the process of negotiating its aircraft leases with its lessors, the lessors served them with notices of termination of the leases and demands to surrender its airplanes. The airline added that threats of legal action to ground aircraft and strand hundreds of passengers led to its decision to file for Chapter 11 protection to allow the carrier to continue to fly while it restructures its debts.

David Uchiyama, Island Air president and CEO, said that once the airline has completed the reorganization process, it 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’s net income loss for the first half of the year was $10.8 million (with $8.2 million loss in the second quarter alone), while for 2016 the carrier lost $17.1 million. Island Air said that revenue continues to rise with $12.5 million in revenues for the second quarter. In the first quarter of 2017, Island Air flew 172,200 passengers (over double the previous quarter’s figure of 75,102).

In January 2016, Hawaii-based investment company PacifiCap acquired controlling interest in Island Air from Ohana Airline Holdings (OAH), which is wholly owned by Oracle corporation founder Larry Ellison. At that time, Island Air announced that it was transitioning its ATR-72 aircraft to Bombardier Q400s, which completed in September. The fleet includes five new Q400s aircraft and a sixth was expected to be added at the end of the year. Elix Aviation Capital was named as the leasing company for the 78-seat turboprops at that time.

victoria@aviationnews-online.com
By victoria@aviationnews-online.com October 26, 2017 16:34