An attorney for Island Air’s aircraft lessor said he is planning to take legal action to seize the airline’s three remaining aircraft and is demanding the state’s second-largest carrier make payments if it is going to be allowed to use them.

Attorney Thomas Kreller told federal Bankruptcy Judge Robert Faris on Friday that Island Air continues to operate the three leased Bombardier Q400s in violation of its leases.

“We believe our leases have been terminated,” Kreller said. “They were terminated (before the bankruptcy filing). We don’t believe (Island Air) is entitled to use them. The debtor disagrees with that and continues to use them. We will be taking action to try and prevent that. If the debtor is allowed to continue to use the airplanes into the future, then they need to both pay for them under the leases and provide adequate protection (collateral).”

Faris told Kreller, who was heard in court by telephone, that aircraft lessors have rights under the U.S. Bankruptcy Code to pursue the matter.

“They can do what they think is appropriate,” Faris said.

Wells Fargo Bank Northwest, the aircraft trustee for Dublin, Ireland-based Elix Assets 8 Ltd., said in a Wednesday filing that Island Air did not pay monthly rent and maintenance reserve payments owed under the leases for July, August and September.

Island Air filed for Chapter 11 bankruptcy protection Monday after Elix sent at least two people to Honolulu to repossess the planes.

Ted Pettit, the Honolulu attorney representing Island Air, told the court Friday it was a relief that the airline was able to make payroll this week with funds specifically released from a bank account for that purpose. He also said the airline’s revenue has improved slightly, but didn’t produce any numbers.

“The airline’s revenues have not significantly declined,” he said. “In fact, there’s been a little boost for the seasonality considering this time of the year. So we feel like we’re off to a good start.”

Faris said he would continue his order to allow Island Air to use the money it has received since filing for bankruptcy to pay operating expenses and payroll through Nov. 15. Faris also said he would allow Pettit until Friday to produce an operating budget that the aircraft lessor and others have been requesting.

Another hearing is scheduled for 10:30 a.m. Nov. 8.