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.
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