Price for Island Air’s assets to be reduced by $125,000

The sale of Island Air’s operating certificate and other assets is not going to generate as much money from Hawaiian Airlines’ parent company as initially expected.

Hawaiian Holdings Inc., which agreed last week to purchase the assets of its former competitor for $750,000, now will need to pay only $625,000. The lower amount is because a previous Island Air filing with Bankruptcy Court erroneously included a substantial inventory of airplane spare parts.

“It turns out that the schedules by Island Air were in error, and (Island Air) had sold the (spare parts) for quick cash just before filing its bankruptcy,” the trustee overseeing the Chapter 7 liquidation said in a supplemental motion filed Friday.

Hawaiian is still scheduled to purchase the operating certificate for $450,000, which would allow a new Hawaiian subsidiary to operate turboprop planes. But the sale of assets has now been reduced to $175,000 from $300,000.

The trustee also said in the motion that the sale will not include Island Air’s frequent-flyer lists.

“Hence no confidential customer information is being exchanged, and there is no need for a privacy ombudsman to protect such information,” the motion said.

A hearing to approve the sale of the operating certificate and the other remaining assets is scheduled for 10 a.m. Jan. 5. Other prospective buyers could outbid Hawaiian’s offer by offering at least 10 percent more, plus attorneys’ fees.

If Hawaiian is not selected as the buyer, it would be entitled to a breakup fee of $31,250 and reimbursement of its attorneys’ fees incurred up to $75,000.

Bankruptcy Judge Robert Faris gave preliminary approval to the sale Dec. 19.

Separately, Faris approved Tuesday an application by the trustee to hire the law firm of Char Sakamoto Ishii Lum &Ching, which has experience in employee benefit plans and could assist the trustee in terminating Island Air’s self-administered 401(k) plan and provide former employees access to their retirement funds.