Air Vanuatu's sole 737 'grounded'
https://www.afr.com/street-talk/naur...0240516-p5je6h
That will take a lot of dollars ….. er, renmimbi.
Can anyone get the article from behind the paywall and post it?
That will take a lot of dollars ….. er, renmimbi.
Can anyone get the article from behind the paywall and post it?
Street Talk understands Nauru Airlines, the flag carrier of Nauru, has entered the race for Air Vanuatu – which collapsed into liquidation on Friday. It’s unsurprising that Nauru Airlines is around the situation, having recently leased a Boeing 737 to Air Vanuatu.
EY, the liquidators, declined to comment when contacted by Street Talk.
Air Vanuatu slipped into voluntary liquidation last week after suddenly cancelling dozens of its international flights. IstockThe Australian Financial Review reported on Wednesday that Fiji Airways has also shown interest in Air Vanuatu, hoping to limit Virgin Australia’s growth in the region. Fiji Airways and Virgin Australia have both added extra flights to Vanuatu to help travellers after Air Vanuatu cancelled dozens of flights.EY has been called in to manage the process with liquidators Morgan Kelly, Andrew Hanson and Justin Walsh handing down a creditors report on Wednesday. Its initial estimate suggests Air Vanuatu owes $US73.5 million ($110 million). “The company’s financial position is dire, and it clearly cannot fund its own operations,” they wrote.
Nauru Airlines is a wholly state-owned enterprise. It operates a seven-plane fleet and flies to destinations such as Brisbane, Nadi in Fiji and Majuro in the Marshall Islands.
The process is expected to draw interest from the federal government which has stepped up its efforts to counter Beijing’s rising influence in the region.
Nauru Airlines is deeply enmeshed with Taiwan, signing a $US25 million loan agreement with Taipei’s Export-Import Bank of ROC in 2021 to help it buy and lease aircraft, financial reports issued by Nauru’s Finance Ministry show. So far, two repayments have been made totalling $1 million.
However, earlier this year, Nauru severed ties with Taiwan and switched its diplomatic allegiances to China. It is unclear how that has affected Nauru Airlines.
Air Vanuatu’s collapse has been linked to Vanuatu’s indebtedness to Chinese Belt and Road Initiative infrastructure projects.
Air Vanuatu’s only Boeing 737 is in Melbourne after being repossessed. Of its five smaller planes, only two are considered “flight-ready”. The airline has 400 staff across Australia, New Zealand and Vanuatu. The valuable piece for a would-be bidder isn’t necessarily the airplanes or operations, but the right to fly to the island, a big draw for tourists.
The grounding comes just days after Australian low-cost carrier Bonza entered voluntary administration. As reported, administrator Hall Chadwick is in talks with a handful of buyers who have expressed interest – although with few assets, it is unclear what exactly is being sold. The airline owes more than $100 million to backers, customers and staff. Bonza’s fleet of aircraft had been 49 per cent held by private equity firm 777 Partners and 51 per cent owned by the management of AIP Capital.
Air Vanuatu’s first creditors’ meeting is scheduled for May 22.
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In a lengthy report to creditors, EY, the company’s liquidators, said Air Vanuatu had a “high-cost base for the size of … operations” and “a significant level of debt”, employing “a high number of staff for an operation of [its] size and nature”.
Air Vanuatu’s single Boeing 737-800 has been out of action since March. IstockAir Vanuatu has been financially supported by the Vanuatu government for some time.AFR Weekend reported that governments in the Pacific indebted to Beijing for Belt and Road Initiative infrastructure spending have begun cutting costs, which sources said was one reason why a financial lifeline to the carrier had been cut.
Air Vanuatu flew to Brisbane, Sydney, Melbourne and Auckland, as well as Nadi in Fiji and Noumea in New Caledonia, and operated a small domestic fleet.
The airline fell into liquidation last Friday after cancelling dozens of its international flights, with airlines across the Pacific rushing to help rescue stranded passengers.
The Australian Financial Review reported on Wednesday that Fiji Airways was interested in acquiring Air Vanuatu. Fiji Airways and Virgin Australia have added extra flights to Vanuatu to help travellers stuck in Port Vila.
On Thursday, the Financial Review’s Street Talk column reported Nauru Airlines was also interested in some of Air Vanuatu’s assets.
Nauru Airlines is a wholly state-owned enterprise. It operates a seven-plane fleet and flies to destinations such as Brisbane, Nadi and Majuro in the Marshall Islands.
Earlier this week, Virgin applied to the International Air Services Commission for permission to fly seven more services a week from July, after the Department of Foreign Affairs and Trade asked the airline for assistance.
In its report to creditors, EY said Air Vanuatu had been “unable to meet the costs of parts critical to the fleet’s operation (resulting in aircraft being grounded for extended periods of time), and encountered issues, such as defaulting under supplier arrangements”.
“The company’s financial position is dire, and it clearly cannot fund its own operations.”
Its initial estimates suggest the company owes $US73.5 million ($110 million) – a figure that does not consider employee entitlements but does include a $US21.8 million loan from the government – but has a shortfall of $US65.9 million to pay all creditors.
“The liquidators understand that prior to the liquidators’ appointment, the government had been providing continual financial support to assist the airline and its operations through the financial challenges,” the report, authored by EY’s Morgan Kelly, Andrew Hanson and Justin Walsh, reads.
“We note that due to the poor state of the company’s financial records, we are unable to verify whether this information is accurate.”
According to the Lowy Institute’s Pacific Aid Map, China has been the second-biggest benefactor of finance to Vanuatu after Australia, providing $483 million in aid and loans.
Critics have accused authorities in China of “debt-trap diplomacy”, saddling impoverished nations with loans they ultimately cannot afford to repay.
Air Vanuatu’s only Boeing 737 is in Melbourne after being repossessed. Of its five smaller planes, only two are considered “flight ready”.
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Critics have accused authorities in China of “debt-trap diplomacy”, saddling impoverished nations with loans they ultimately cannot afford to repay.
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Who would honestly want the business?
Fiji Airways has enough of their own work.
Air Nauru is financed to the hilt.
Virgin have to outsource their own work.
It’s a basket case that will be bailed out by AusAid and fail again
Fiji Airways has enough of their own work.
Air Nauru is financed to the hilt.
Virgin have to outsource their own work.
It’s a basket case that will be bailed out by AusAid and fail again
The costs to run a one aircraft operation without government money isn’t viable on its own accord, if one intends to make profit.
Samoa Airways was another one that didn’t even launch. Rex picked up the 737.
Just let Fiji or Virgin run the services.
Samoa Airways was another one that didn’t even launch. Rex picked up the 737.
Just let Fiji or Virgin run the services.
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Except no-one 'sends them broke'. These pissant Pacific nations send themselves broke with grandiose dreams that they can run airlines at a profit. It's an ego thing for the politicians who must fly the national flag no matter what it costs.
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Not always the politicians. Management in charge quite often have grandiose ambitions that they con the locals into believing too. It’s happened before, it will no doubt happen again.
True. These nations want the cake and they gloat about wishing to eat it too.
Samoa was a classic example. Virgin sent them a $6m dividend as part of its services it was offering for the government. They said it wasn’t enough. They also said they weren’t getting enough benefits from Virgin. Something then about they wish to wave the flag and start our own airline.
They then signed a 737 lease and bankrupt themselves before it even started.
Should have kept the Virgin deal going, at least it was cash positive.
Samoa was a classic example. Virgin sent them a $6m dividend as part of its services it was offering for the government. They said it wasn’t enough. They also said they weren’t getting enough benefits from Virgin. Something then about they wish to wave the flag and start our own airline.
They then signed a 737 lease and bankrupt themselves before it even started.
Should have kept the Virgin deal going, at least it was cash positive.
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