Bonza has its AOC
Doubtless, a little game of semantics is being played by Timbo; the AFR reporting was that "Bonza’s financiers" had called on KordaMentha, so technically it is probably correct to say that KM has no relationship with Bonza per se. It is not difficult to see the bigger picture though.
Sources said KordaMentha partner Sebastian Hams, who leads the firm’s aviation practice, was this week appointed by an entity within the 777 group to look into Bonza’s financial state and viability.
Federal US authorities are also reported to be investigating whether 777 has broken anti-money laundering laws.
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Bonza cuts Gold Coast flights amid trouble registering aircraft
Ayesha de KretserSenior reporterApr 19, 2024 – 5.21pmSave
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Bonza, the budget airline backed by Miami private equity firm 777 Partners, has cut flights from the Gold Coast, and an aircraft that was meant to be based at the Queensland airport remains grounded.
From May 1, Bonza will reduce the number of flights from Melbourne to the Gold Coast to one a week, and increase flights to the Sunshine Coast – where it has another two aircraft based – to five a week.
Passengers board a full Bonza flight from Melbourne to Port Macquarie on Thursday. Eamon Gallagher It has also reduced flights from the Gold Coast to Launceston from three to one a week, and scrapped its Gold Coast to Mount Isa service. The changes follow the closure of five routes in July, six months into its operations.The Boeing 737-MAX aircraft, named Bruce, which was meant to be based at the Gold Coast, has been grounded since March, when it was redirected from Canadian low-cost airline Flair to fly in Australia.
A Bonza spokeswoman said the plane required re-certification from the Civil Aviation Authority after being transferred from Flair, a process she said had taken longer than expected. The aircraft currently remains registered as flying for Flair. Bonza had been wet-leasing an aircraft from Nauru Airlines, which abruptly cancelled flights this week.
Bonza and Flair are backed by Miami-based private equity firm 777 Partners, which was stripped of its planes by New York-based funder A-Cap this month.
Financiers to 777 and Bonza have called in corporate restructuring house KordaMentha to assess the airline’s operations. A Bonza spokeswoman confirmed that the airline’s fleet of 737-MAX 8 planes had been transferred to a new company, Phoenix Aviation Capital, which is wholly owned by A-Cap.
Phoenix will be operated by AIP Capital, which is 51 per cent owned by its management. A-Cap took control of the remaining 49 per cent from 777 this month, in a move that also had it take charge of 30 Boeing 737-MAX 8 planes.
Leasing rates for narrow-body aircraft have rocketed since 777 acquired the planes during the depths of the COVID-19 pandemic. The Bonza spokeswoman said 777 would continue to back the airline financially and that its long-term lease agreements remained in place.
Bonza managing director Tim Jordan has said the airline needs at least 10 planes to become profitable. It has opened routes – largely where major airlines do not fly – to service budget-conscious leisure travellers.
However, it has faced problems in expanding its fleet in an extremely tight leasing market.
There are also questions over the financial standing of 777 – which is being sued by Irish lessors over unpaid aircraft leases, pursued by the US Justice Department over money-laundering allegations and to whom A-Cap has withdrawn a funding line.
Could understand a 737 Max, Mildura- Gold Coast a few times a week for tourist traffic.
Australians have long memories and will be gun shy about booking too far in the future . Ie buy the ticket at the gate if they can see a plane , crew and it’s been refuelled .
A buyer would be unlikely as the lessor would most certainly take repossession of its assets under the Cape Town convention which they are entitled to, and that timeframe in Australia is 60 Days post entering administration. If this enters administration, it’s likely done.
Often during these processes, as seen at Virgin, these periods are used to then ‘renegotiate’ leases, make everything look pretty, often more favourable toward the insolvent company. Virgin got lucky on that front as it wasn’t a great time for leasing companies. However, now is different, and leasing companies would be looking to negotiate up, not down. They won’t want to hang around either, demand for new aircraft is as high as it’s ever been.
They said above they are in long term lease contracts. That is fantastic and all, but one breach of the contract and those assets are gone, as seen at its Flair offshoot.
The interesting bit is Bonza’s financiers have apparently kickstarted this review, I wonder if that tipoff came from its leasing company which it still has some form of relationship with, from default notices, and repossession threats? 777 now entering the fray to see what the exit options are.
Often during these processes, as seen at Virgin, these periods are used to then ‘renegotiate’ leases, make everything look pretty, often more favourable toward the insolvent company. Virgin got lucky on that front as it wasn’t a great time for leasing companies. However, now is different, and leasing companies would be looking to negotiate up, not down. They won’t want to hang around either, demand for new aircraft is as high as it’s ever been.
They said above they are in long term lease contracts. That is fantastic and all, but one breach of the contract and those assets are gone, as seen at its Flair offshoot.
The interesting bit is Bonza’s financiers have apparently kickstarted this review, I wonder if that tipoff came from its leasing company which it still has some form of relationship with, from default notices, and repossession threats? 777 now entering the fray to see what the exit options are.
Sounds like Little Miss Sports Rorts has unilaterally decided to flick the ELT to ON. That should calm things down.
Source: https://www.couriermail.com.au/busin...0258f75c02d6c0
‘Save Bonza’: Budget airlines future in limbo
The budget airline charmed Australians with its larrikin styling, but the growing concerns over its future are no laughing matter.
Stephen Drill and Ben Butler
April 19, 2024 - 6:31PM News Corp Australia Network
Opposition transport spokeswoman Bridget McKenzie has called on the Albanese government to do everything it can to save budget airline Bonza following concerns over its future.
Backers of Bonza’s US owners have called in heavyweight advisory firm KordaMentha to run the ruler over the finances of the airline, which runs cheap flights between Australian holiday destinations.
The move comes amid turmoil at Bonza’s Miami-based owner, 777 Partners, which also owns insurance companies, media outlets and sports teams including the Melbourne Victory football club.
Bonza has been flying Australian skies for just 15 months.
Senator McKenzie said the government should bring in reforms designed to cut airfares, improve services and drive competition between airlines that were recommended by a parliamentary inquiry last year.
“Bonza has breathed new life into the sector, with innovative, affordable offerings between regional capitals and I hope that the Albanese Government does all that it can to ensure they succeed,” she said.
“It is clear that the more airlines operating in the Australian domestic market the more choice for Australian travellers and the more affordable the ticket price.
“The Albanese Labor Government should be ensuring that policy settings are right to increase competition in Australia’s aviation sector and looking at ways to ensure start-ups like Bonza don’t get crushed by the legacy carriers.”
The Transport Workers Union’s acting national assistant secretary, Emily McMillan, said action was needed to rebuild the damaged aviation sector.
“Whatever the issues behind the scenes at Bonza, it’s clear our aviation industry is a hostile market for any new entrant, marked by aggressive competition and a lack of regulated standards,” she said.
“Record profits have returned to the industry, but travellers are still slugged with costly airfares and lacklustre service standards following the decimation of the workforce and wages over the last 15 years.”
Sources said KordaMentha partner Sebastian Hams, who leads the firm’s aviation practice, was this week appointed by an entity within the 777 group to look into Bonza’s financial state and viability.
In Miami, 777 is itself under heavy pressure after state regulators in the US ordered one of its key funders, insurance company A-Cap, to slash its investment in the group by $US1.8bn ($2.8bn).
Federal US authorities are also reported to be investigating whether 777 has broken anti-money laundering laws.
In addition, 777 has been hit by a blizzard of lawsuits in the USA over allegations including unpaid loans, executive pay and breach of contract.
Bonza chief executive Tim Jordan has been contacted for comment.
A Bonza spokesperson said: “Neither Bonza nor our investor 777 Partners have appointed KordaMentha as financial advisors or in any other capacity.”
The budget airline charmed Australians with its larrikin styling, but the growing concerns over its future are no laughing matter.
Stephen Drill and Ben Butler
April 19, 2024 - 6:31PM News Corp Australia Network
Opposition transport spokeswoman Bridget McKenzie has called on the Albanese government to do everything it can to save budget airline Bonza following concerns over its future.
Backers of Bonza’s US owners have called in heavyweight advisory firm KordaMentha to run the ruler over the finances of the airline, which runs cheap flights between Australian holiday destinations.
The move comes amid turmoil at Bonza’s Miami-based owner, 777 Partners, which also owns insurance companies, media outlets and sports teams including the Melbourne Victory football club.
Bonza has been flying Australian skies for just 15 months.
Senator McKenzie said the government should bring in reforms designed to cut airfares, improve services and drive competition between airlines that were recommended by a parliamentary inquiry last year.
“Bonza has breathed new life into the sector, with innovative, affordable offerings between regional capitals and I hope that the Albanese Government does all that it can to ensure they succeed,” she said.
“It is clear that the more airlines operating in the Australian domestic market the more choice for Australian travellers and the more affordable the ticket price.
“The Albanese Labor Government should be ensuring that policy settings are right to increase competition in Australia’s aviation sector and looking at ways to ensure start-ups like Bonza don’t get crushed by the legacy carriers.”
The Transport Workers Union’s acting national assistant secretary, Emily McMillan, said action was needed to rebuild the damaged aviation sector.
“Whatever the issues behind the scenes at Bonza, it’s clear our aviation industry is a hostile market for any new entrant, marked by aggressive competition and a lack of regulated standards,” she said.
“Record profits have returned to the industry, but travellers are still slugged with costly airfares and lacklustre service standards following the decimation of the workforce and wages over the last 15 years.”
Sources said KordaMentha partner Sebastian Hams, who leads the firm’s aviation practice, was this week appointed by an entity within the 777 group to look into Bonza’s financial state and viability.
In Miami, 777 is itself under heavy pressure after state regulators in the US ordered one of its key funders, insurance company A-Cap, to slash its investment in the group by $US1.8bn ($2.8bn).
Federal US authorities are also reported to be investigating whether 777 has broken anti-money laundering laws.
In addition, 777 has been hit by a blizzard of lawsuits in the USA over allegations including unpaid loans, executive pay and breach of contract.
Bonza chief executive Tim Jordan has been contacted for comment.
A Bonza spokesperson said: “Neither Bonza nor our investor 777 Partners have appointed KordaMentha as financial advisors or in any other capacity.”
Mick, the same government who had a crack at Labor for claiming they would have bankrolled Virgin if in power, is now asking the Labor to save Bonza? The senator has no credibility.
They seem to be pushing on Labor for any failure here. And more specifically, the duopoly. Bonza barely even operate alongside the duopoly, are they braindead?
Any failure here, needs to go back to the AOC process. If anything, an inquiry needs to be held around the process, these claims shouldn’t be occurring in a AOC infancy, the process asks you to provide financial assurance for 3 years.
There are fairly high bars to achieve in order to setup ops here, financial stability is one aspect of it. To have something on the verge of collapse so soon, would indicate information provided wasn’t accurate. So they shouldn’t have been granted a AOC to even begin with, which in turn won’t screw over hundred of employees, and the regulator can then waste their time on some other initiative.
Taxpayers are not to spend a cent saving this. No loans. Nothing. This whole operation should never have been approved to begin with. Taxpayers will be on the hook for employee entitlements, and that’s where it needs to remain, no Albo deals.
They seem to be pushing on Labor for any failure here. And more specifically, the duopoly. Bonza barely even operate alongside the duopoly, are they braindead?
Any failure here, needs to go back to the AOC process. If anything, an inquiry needs to be held around the process, these claims shouldn’t be occurring in a AOC infancy, the process asks you to provide financial assurance for 3 years.
There are fairly high bars to achieve in order to setup ops here, financial stability is one aspect of it. To have something on the verge of collapse so soon, would indicate information provided wasn’t accurate. So they shouldn’t have been granted a AOC to even begin with, which in turn won’t screw over hundred of employees, and the regulator can then waste their time on some other initiative.
Taxpayers are not to spend a cent saving this. No loans. Nothing. This whole operation should never have been approved to begin with. Taxpayers will be on the hook for employee entitlements, and that’s where it needs to remain, no Albo deals.
Last edited by nomess; 20th Apr 2024 at 06:34.
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Alan Joyce AC has a few lazy millions salted away. Maybe he could help Bonza?
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The problem is you need a completely incompetent board to facilitate a swindle like that and a chairperson who will approve ludicrous share sales just before the house of cards is exposed.
Maybe he could bring Goyder with him.
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I wouldn't be laying too much at the feet of the Financial Viability Assessment component of the AOC process. While I would expect that the expenses-side of the sheet would be fairly accurate, the revenue-side, particularly for such a novel business-model, would be flakier than a Lune croissant.
And at the end of the day, even the most diligently prepared three year cash flow forecast would carry at least two caveats:
And at the end of the day, even the most diligently prepared three year cash flow forecast would carry at least two caveats:
- It is difficult to make predictions, especially about the future.
- Things change.
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I wouldn't be laying too much at the feet of the Financial Viability Assessment component of the AOC process. While I would expect that the expenses-side of the sheet would be fairly accurate, the revenue-side, particularly for such a novel business-model, would be flakier than a Lune croissant.
And at the end of the day, even the most diligently prepared three year cash flow forecast would carry at least two caveats:
And at the end of the day, even the most diligently prepared three year cash flow forecast would carry at least two caveats:
- It is difficult to make predictions, especially about the future.
- Things change.
They have pulled all the recruitment ads they had, which was about 8.
It’s over folks.
Shoutout to the crews who turned up and operated a stupidly delayed 3am Mackay to Sunshine Coast service this morning, you didn’t have to, but you did. Your commitment to the profession does not go unnoticed across the industry, and once again, the wider aviation profession will stand with the front line teams as you navigate through this, we don’t stand with management however, once again.
It’s over folks.
Shoutout to the crews who turned up and operated a stupidly delayed 3am Mackay to Sunshine Coast service this morning, you didn’t have to, but you did. Your commitment to the profession does not go unnoticed across the industry, and once again, the wider aviation profession will stand with the front line teams as you navigate through this, we don’t stand with management however, once again.
Last edited by nomess; 20th Apr 2024 at 19:21.
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Shoutout to the crews who turned up and operated a stupidly delayed 3am Mackay to Sunshine Coast service this morning, you didn’t have to, but you did.
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Mick, the same government who had a crack at Labor for claiming they would have bankrolled Virgin if in power, is now asking the Labor to save Bonza? The senator has no credibility.
They seem to be pushing on Labor for any failure here. And more specifically, the duopoly. Bonza barely even operate alongside the duopoly, are they braindead?
They seem to be pushing on Labor for any failure here. And more specifically, the duopoly. Bonza barely even operate alongside the duopoly, are they braindead?
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Bridget McKenzie is based in Wodonga, next door to Albury which has benefitted from Bonza's weird route choices to fly brand new 189 seat MAXs to the Sunshine and Gold Coasts from a regional centre of less than 100,000 in population, so does have a local agenda to want to keep the airline flying. They aren't even challenging the duopoly as both QF and VA weren't stupid enough to put any seats on those routes.
Albury is one of, if not the best performing destination for both OOL and MCY. Flights are almost always above 90% full.
Albury worked for them. However it’s only 5% of whole pie. Population is quite significant when you factor in anything within an hour radius, you can see why it worked, a market starved of low
cost capacity.
Qantas picked up on that success and already upgraded to E190s into Albury.
But even then, Albury was full for them, did it still make money? Fixed costs here are likely very high so that is debatable.
cost capacity.
Qantas picked up on that success and already upgraded to E190s into Albury.
But even then, Albury was full for them, did it still make money? Fixed costs here are likely very high so that is debatable.
Does anyone know at what stage a ticket purchased by credit card will no longer be refunded if they go under?
Request a chargeback the day they announce they are insolvent, and make sure you advise the bank that they are insolvent.
In terms of a refund from the carrier directly, according to all reports they have been taking many months to process refunds, was alluded to as being a very manual process, ie one person sitting there processing one by one. I would be very surprised if they are still processing refunds. The question is, how much forward revenue have they actually burnt through?
Bonza has no assets. Forward revenue is about all here that’s at play. 777 Partners is the financier so would be a secured creditor. The employees will be looked after via numerous government schemes. Customers will get zilch.
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