Island Air will file for Chapter 11 bankruptcy protection, but officials said ticketing and flights will continue as normal.
The filing is needed, the airline said in a news release, "in an effort to continue normal operations while navigating through legal challenges recently presented by the lessors of its aircraft."
The airline added, "The bankruptcy filing was caused by threats of legal action to ground the aircraft and strand hundreds of passengers."
During the bankruptcy reorganization, Island Air said it plans to fly its scheduled routes as normal and honor all previously purchased tickets.
Frequent flyer and other customer service programs will also not change.
The airline said that last week, "while in the process of negotiating its aircraft leases with its lessors, Island Air was very surprised that the lessors served them with notices of termination of the leases and demands to surrender its airplanes."
"Prioritizing its customers, employees and the communities it serves, Island Air made the difficult decision to file for bankruptcy protection. Continuing to operate under the protection of the United States Bankruptcy Court will allow Island Air to maintain its service to its customers, provide continued employment to its more than 400 valued employees, and ensure a revenue stream so its vendors are paid."
David Uchiyama, Island Air president and CEO, said that once the airline completes bankruptcy reorganization, "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.”