Hawaiian Airlines parent company to buy Island Air assets

HONOLULU (AP) – Hawaiian Airlines’ parent company agreed to purchase Island Air’s operating certificate and other assets in a move that could save the failed interisland carrier from liquidation.

The trustee overseeing Island Air’s bankruptcy case filed a last-minute motion disclosing Hawaiian Holdings Inc.’s purchase.

If the sale is approved, the trustee’s attorney Simon Klevansky said he would convert the case to a Chapter 11 reorganization bankruptcy.

The Honolulu Star-Advertiser reported Tuesday that Hawaiian Holdings Inc. said it would buy the operating certificate for $450,000 and immediately provide cash advances to pay for Chapter 7 administrative expenses. Hawaiian Holdings said it would buy other assets, such as ground-service equipment, furniture and frequent-flyer lists, for $300,000.

Bankruptcy Judge Robert Faris gave preliminary approval to the sale.

A hearing on the sale is set for Jan. 5.

Hawaiian Holdings spokesman Alex Da Silva said that the decision to buy the operating certificate was a way to bring in-house the company’s turboprop airline, rather than outsource the contract as it is now to Idaho-based Empire Airlines. ‘Ohana by Hawaiian, the turboprop airline launched in March 2014, has three 48-seat ATR-42s.

Da Silva said that the state’s largest carrier formed a new wholly owned subsidiary, Elliott Street Holdings, to purchase the stock of Island Air and assume ownership of Island Air’s Federal Aviation Administration operating certificate as well as other assets.

“If approved, the sale will allow ‘Ohana by Hawaiian to assume oversight of operations currently provided under contract by Empire Airlines,” Da Silva said. “Those operations would include the hiring of pilots, flight attendants and customer service and maintenance crews (who now are all Empire employees). We believe that assuming the FAA certificate will greatly benefit our guests by improving the efficiency and reliability of ‘Ohana by Hawaiian.”

If the sale is approved, Hawaiian Holdings would buy new shares of what essentially would be a shell company.

Klevansky said that the trustee is still working on trying to allow the 400-plus former Island Air employees to gain access to their 401(k) retirement accounts.

Island Air filed for Chapter 11 bankruptcy Oct. 16 and ceased operations Nov. 10. It converted the case to Chapter 7 on Nov. 15.