Larry Ellison Faces $67 Million Loss and Potential Liabilities in Island Air Bankruptcy Trial

Billionaire Larry Ellison, co-founder of Oracle and former owner of defunct Island Air (Hawaii), is grappling with financial repercussions as he faces a trial in the Hawaii District Court. Ellison reportedly incurred a loss exceeding $67 million due to the collapse of Island Air, and he may be liable for an additional $30 million in backpay penalties, unsettled debts, and potential punitive damages.

The trial, initiated by bankruptcy trustee Elizabeth Kane representing creditors, along with the Airline Pilots Association (ALPA) and the Hawaii Teamsters representing Island Air’s employees, alleges that Ellison and other Island Air owners acted in their self-interest when the airline went bankrupt. The complaint asserts that the owners failed to provide the required 60-day notice to the 400 employees and withheld final paychecks and medical aid premiums.

Defendants in the case include various entities such as PaCap Aviation Finance, LLC; PacificCap Investment Management, LLC; Malama Investments, LLC; Snowbiz Ventures, LLC; PaCap Management Solutions, LLC; PaCap Advisors, LLC; and individuals like Jack Tsui, Jeffrey Au, Paul Marinelli, and Larry Ellison.

Ellison testified that he acquired Island Air in 2013 to provide high-quality service to his resorts on Lanai. He sold two-thirds of Island Air to Jack Tsui in 2016. By 2017, the airline was facing financial losses, prompting Ellison to reveal that Island Air was losing over a million dollars monthly while competing with larger Hawaiian Airlines.

Island Air suspended operations on November 11, 2017, after lessor Elix Aviation Capital took action over outstanding lease payments for three DHC-8-Q400s. Ellison admitted that the competitor, Hawaiian Airlines, allegedly attempted to run Island Air out of business by undercutting fares and creating financial challenges.

The ongoing trial is expected to last until October 27, 2023, as Ellison navigates through legal complexities and financial implications tied to the bankruptcy of Island Air. Stay tuned for updates on the trial proceedings and its potential impact on Larry Ellison’s financial standing.