November 13, 2017

Island Air ceases operations after filing for Chapter 11 bankruptcy

After filing for Chapter 11 bankruptcy protection last month, as of November 11, Hawaii’s Island Air has ceased all operations. Following last Friday’s flights, all airplanes were grounded and any passengers who had booked flights from November onwards were advised to make alternative arrangements.
Island Air was responsible for operating over 400 flights per week between Oahu, Maui, Kauai and Hawaii Island. Island Air filed for Chapter 11 bankruptcy as a consequence of threats of legal action made by aircraft lessors, who will now look to repossess these planes. Despite a substantial expansion plan and replacement of the existing fleet of ATR-72s with Q400 turboprop aircraft, 17 successive quarters without making a profit took its toll. In the first quarter of 2017 operating costs increased by 44 percent compared to the first quarter of 2016, while revenue doubled. However, a loss of US$8.2 million in the second quarter of this year, its largest loss since the last quarter of 2014 brought matters to a head.
The airline has had several owners over recent years, including PacifiCap LLC, who purchased the airline in February 2016 from Ohana Airline Holdings, a company controlled by Oracle CEO Larry Ellison.
George D. Szigeti, president and CEO of the Hawaii Tourism Authority, said in a statement: “The news of Island Air ceasing flight operations is truly unfortunate, especially for the 400 employees whose families depended on the airline for their livelihood. With Hawaii’s strong economy, we are hopeful they will find new opportunities to re-start their careers in travel and other industries locally.”



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