Losses started in 2010
From the Brisbane Times.
Creditors of defunct airline Air Australia have been warned not to expect to recoup much money, if anything at all, after it was revealed the company had just $440,000 in the bank on the night it went into voluntary administration - compared to debts of between $80 million and $90 million.
During a one-hour meeting in Brisbane this morning, about 70 creditors, mostly employees of the failed low-cost airline, were told Air Australia's losses over the past 18 months totalled $65 million.
Mark Korda, from administrators KordaMentha, warned creditors the sale of Air Australia group assets was not expected to generate a large return.
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Between $5 million and $6 million, held in security deposits for plane leases, had already been taken by those parties involved, he said.
He said creditors were looking at figures in the "hundreds of thousands" not the "tens of millions" for any asset sales, with any money recovered going straight to employee super payments.
ANZ Bank was listed as the major creditor and Mr Korda estimated its losses to be more than $20 million.
In describing Air Australia's losses as "horrendous" Mr Korda said Air Australia had been using advanced ticket sale money to cover the losses.
Approximately $65 million in tickets for future flights had been sold when the company ceased flying on February 17, stranding 4000 passengers.
Mr Korda said the losses appeared to have begun in 2010, when the company, then known as Strategic, lost its defence contract and instead made the decision to become a low-cost airline.
He said the company had been predicted to turn a small profit from March, but the losses in the months beforehand had crippled the business.
Mr Korda said Air Australia records had revealed employee super, mandated by law, had not yet been paid for the December quarter, or January.
Company director Michael James did not front the creditors meeting, however, Mr Korda said he believed him to still be in the country.
Mr Korda said Mr James had been co-operative with his staff and said it had been his prerogative as to whether he attended or not.
"I'm sure he is under a considerable amount of stress," he said.
Employees can expect to recoup $5 million of the $8 million owed them, through the federal government's Geers scheme, a program established to ensure part of employees entitlements are paid in the event of a company collapse.
However, Geers payments are capped at a salary of $118,000, meaning higher paid workers miss out on entitlements.
Mr Korda said an engineering company that traded under the Air Australia group umbrella had received attention from "four interested parties" but he could not discuss an anticipated sale price.