In a surprise twist to Island Air’s bankruptcy case, Hawaiian Airlines’ parent company has agreed to purchase the assets of its former competitor for $750,000.

Hawaiian Holdings Inc. said Tuesday it would buy for $450,000 Island Air’s operating certificate, which would allow a new Hawaiian subsidiary to operate turboprop planes.

Hawaiian said it would purchase other Island Air assets, such as ground- service equipment, furniture, and customer and frequent-flier lists, for $300,000.

Some of the $300,000 will be used to pay rental charges that were owed on those assets, with 85 percent of the remaining balance being paid to Island Air’s owners, Honolulu venture capitalist Jeffrey Au and billionaire Larry Ellison.

Bankruptcy Judge Robert Faris said he was prepared to end the Island Air bankruptcy case at a hearing Tuesday because of a lack of money.

Hawaiian’s offer to buy Island Air assets came in a motion filed about 30 minutes before the start of the hearing. Faris gave preliminary approval to the sale. Other parties still could come in and outbid Hawaiian. A hearing on the sale is set for 10 a.m. Jan. 5.

“At the last hearing (on Dec. 7), I didn’t think anything like this was going to happen,” Faris said. “I was sure we were going to have a dismissal (Tuesday). But it looks like maybe something has been salvaged here, and whether that can be worked out remains to be seen in the following hearings. But I am pleased to see that happen. I’m also thankful to Hawaiian Holdings for stepping up. Hawaiian Holdings should be acting in its own self- interest, but at the same time it is doing a service for the company and the creditors.”

Hawaiian spokesman Alex Da Silva said the decision to buy the operating certificate was a way to bring in-house Hawaiian’s turboprop airline, ‘Ohana by Hawaiian.

Hawaiian contracts with Idaho-based Empire Airlines to run ‘Ohana.

Da Silva said the state’s largest carrier this week 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. Elliot Street runs along the Ewa edge of Daniel K. Inouye International Airport in Honolulu.

‘Ohana by Hawaiian, which launched service in March 2014 and now has three 48-seat ATR-42s, flies between Honolulu and Molokai, Honolulu and Lanai, Kahului and Kona, Kahului and Molokai, Kahului and Hilo, and Lanai and Molokai. ‘Ohana by Hawaiian is also gearing up to start an all-cargo operation with three ATR-72 aircraft.

“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, flights 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. … Owning the certificate gives us flexibility as we consider the long-term needs of the business.”

The sale of the operating certificate would need approval from the FAA and the U.S. Department of Transportation.

The bankruptcy trustee’s attorney, Simon Klevansky, said money from the sale of Island Air assets would enable the trustee to continue working on trying to remedy the employees’ 401(k) situation so they can gain access to their retirement accounts. Since Island Air shut down, employees haven’t been able to access money in their retirement accounts because there is no one remaining to oversee the company’s self- administered 401(k) plan and respond to former employees’ request to access the funds.

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