RIP Bonza
The Australian Financial Review has confirmed Vietnam’s VietJet was among (the six companies) looking at Bonza’s aircraft operator certificate, a crucial licence needed to establish a foothold in the domestic aviation market. Bonza, which began flying only last year, has few other assets, with its aircraft heading overseas to other carriers.
Join Date: Feb 2015
Location: Gold Coast, QLD, Australia
Posts: 28
Likes: 0
Received 1 Like
on
1 Post
[non pilot]. What a damned shame to follow this on FR24 as it will shortly land at an Aussie airport, albeit in the Pilbara, for the final time.
Oh wait, any Bonza enthusiasts can buy a 1:400 replica of "Malc" from your friendly modelling supplier or one of the UK ebay stores for 93 quid. They've even updated the owner to Phoenix Aviation, jeez.
Oh wait, any Bonza enthusiasts can buy a 1:400 replica of "Malc" from your friendly modelling supplier or one of the UK ebay stores for 93 quid. They've even updated the owner to Phoenix Aviation, jeez.
AOC holding entities are and always have been subject to ongoing obligations about, for example, key personnel, chain of command, facilities... If, for example, a whole bunch of key people and important organisational arrangements disappear from within an RPT AOC-holding entity - for whatever reason, including a change of control of the entity - CASA will be all over it like a cheap suit.
It looks like the administrators are just going through the box ticking checklist in trying to sell the business as a going concern. With the aircraft winging their way out of the country it’s basically all over. I wonder if the government will put an “Ansett ticket tax” on airfares to cover staff entitlements.
This AOC is a just license to print red ink.
Even thinking about the costs to restart this is horrific. You wouldn’t be able to source aircraft for 4-6 months. Not only that, but you would be paying top dollar, but the elephant in the room being the company’s obviously questionable financial past, you just wouldn’t touch it as a lessor. Not to mention trying to restart with a new Management and Flight Ops teams, while somehow trying to convince CASA you know what you are doing.
I somewhat get the feeling that Tim Jordan just doesn’t want to admit defeat on this. Absolute madness if you ask me. Is he trying to look after himself here? Sell it off, and avoid potential action against himself from ASIC, I note he has his own consulting firms, which could be closed if restrictions are thrown at him. Essentially he is bankrupt.
Michael James from Air Australia got taken to the cleaners.
Even thinking about the costs to restart this is horrific. You wouldn’t be able to source aircraft for 4-6 months. Not only that, but you would be paying top dollar, but the elephant in the room being the company’s obviously questionable financial past, you just wouldn’t touch it as a lessor. Not to mention trying to restart with a new Management and Flight Ops teams, while somehow trying to convince CASA you know what you are doing.
I somewhat get the feeling that Tim Jordan just doesn’t want to admit defeat on this. Absolute madness if you ask me. Is he trying to look after himself here? Sell it off, and avoid potential action against himself from ASIC, I note he has his own consulting firms, which could be closed if restrictions are thrown at him. Essentially he is bankrupt.
Michael James from Air Australia got taken to the cleaners.
I wonder if the government will put an “Ansett ticket tax” on airfares to cover staff entitlements.
Join Date: Jun 2023
Location: Melbourne
Posts: 3
Likes: 0
Received 0 Likes
on
0 Posts
I somewhat get the feeling that Tim Jordan just doesn’t want to admit defeat on this. Absolute madness if you ask me. Is he trying to look after himself here? Sell it off, and avoid potential action against himself from ASIC, I note he has his own consulting firms, which could be closed if restrictions are thrown at him. Essentially he is bankrupt.
If anything is going to come of it, it will require most - if not all - of the debt to be written off, then VietJet will need to raise some capital in order to fund an Oz development. They have talked about raising foreign debt from other Asian markets, so that could be a thing, but I can't imagine throwing that into VietJet Oz.
Look, it may well be serious, but everyone has a look under the hood and few - if any - will put their pen to paper.
Join Date: Mar 2007
Location: Australia
Age: 57
Posts: 34
Likes: 0
Received 0 Likes
on
0 Posts
It looks like the administrators are just going through the box ticking checklist in trying to sell the business as a going concern. With the aircraft winging their way out of the country it’s basically all over. I wonder if the government will put an “Ansett ticket tax” on airfares to cover staff entitlements.
https://www.dewr.gov.au/fair-entitlements-guarantee
Join Date: Jun 2023
Location: Melbourne
Posts: 3
Likes: 0
Received 0 Likes
on
0 Posts
This guy has been wrong about this situation from the start, appears he's towing the narrative from Bonza without actually verifying the information...
Yet he's somehow the go-to guy for the news outlets as the 'aviation expert'. When the KordaMentha news broke, he went on record to say he didn't think these rumours had any merit. Less than 2 weeks later when the airline collapsed, he was again on TV running with the line "Bonza was viable but it's squarely 777 that's responsible for the collapse". If Bonza was viable, they would've been able to pay their own leases. If Bonza was operating with the load factors and improving yields referenced in the article, they wouldn't have been running non-stop $39 fare sales.
This guy has been wrong about this situation from the start, appears he's towing the narrative from Bonza without actually verifying the information...
This guy has been wrong about this situation from the start, appears he's towing the narrative from Bonza without actually verifying the information...
Aviation is a challenging field for news reporting; the people most qualified to offer accurate information and cogent opinions are generally prevented from commenting by their conditions of employment. So journos are often relying on has beens, never weres, "academics", and the like to balance out whatever waffle has come out from some Corporate Communications department.
And the old "immediacy over accuracy" focus of today's news generally means they'll take whatever information they can get quickly.
And then there's what seems to be the prevalent view that decisive, black or white reporting is favoured over more considered and measured commentary. Blaming something or someone seems to trump "at this time we simply do not have enough information to make a call" every day of the week, and twice on Sundays.
In short (and I'm cognisant that we've gone the long way to get there), the fellow in question ticks all the boxes on the Worst Aspects of Reporting News in the Age of Social Media checklist.
Regarding his commentary on Bonza, for starters, I very much doubt he has access to all the information necessary to make the sort of big calls he's making. No one outside of Bonza’s CEO and CFO will have something even vaguely approaching "the full picture", but I'm a bit reluctant to trust anything either of them might say on the matter. Absent having access to the data room that the Administrators have established, everyone (present company included) is guessing, with some guesses somewhat more educated than others.
I would note a few things. First up, when people comment on the "business model", specifically what are they talking about? My reading of the Bonza business model is that it was at its core a low cost carrier model (no frills base offering with on-sells, single class) pitched at almost exclusively regional-to-regional travel. They were looking to largely avoid going toe-to-toe with the majors by focussing on then unserviced routes. A premise, and an important one, was that they could stimulate previously dormant demand; they weren't looking at trying to carve out a piece of the pie, rather they were focussed on growing the pie. Like it or lump it, fleet selection was as important a part of the business model as was route selection.
When you define the "business model" like that, it is pretty clear that it did not work. While they most assuredly did stimulate new demand, it simply wasn't enough to sustain a profitable operation.
On this, it is probably important to note that the fleet choice was probably not as big a factor as some people make out. In the MAX they almost certainly had the cheapest CASK of any narrow body in the country. Going to something like an E-jet sees CASK go up, and you can only make money when RASK exceeds CASK. What going to a smaller, second-hand jet does do is lower the break even point in terms of seats sold but that's not a silver bullet. The whole thing is a bit more complicated than the "it would have worked with a smaller jet" fix.
And on fleet choice, it is worth noting that apparently Timbo built his initial modelling around ATR-72s, I think. I'm not convinced that would have worked either; I think that at least part of the demand they created was because they were offering something other than a turboprop.
Any old how, the last thing I would note is that the amount of "savings" on airfares that the Bonz is claiming their passengers have pocketed is roughly the same as their current debt position. That struck me as potentially a "we don't pay our bills or our staff, and we pass the savings on to you" sort of Peter-Paul construct.
The following 3 users liked this post by MickG0105:
Something is not adding up to me
Headlines state $100million owed at collapse
Bonza touting almost 1 million seats sold to date even at $80 per seat average, this is $80million in sales of you include BOB
So income around $80 million
Lease 4 Max's at $400k per month for 15 months $24mil
$4k per sector for fuel for around another $24mil
Staff ? $20mil
All the other bits and pieces like taxes, maintenance, airport charges plus many more, lets say $20mil
So expenditure wold be close to $100mil
The above are very loose figures but shows $20mil loss, so how is it $100,000,000.00?
Was it 777 gouging Bonza on leases ?
Headlines state $100million owed at collapse
Bonza touting almost 1 million seats sold to date even at $80 per seat average, this is $80million in sales of you include BOB
So income around $80 million
Lease 4 Max's at $400k per month for 15 months $24mil
$4k per sector for fuel for around another $24mil
Staff ? $20mil
All the other bits and pieces like taxes, maintenance, airport charges plus many more, lets say $20mil
So expenditure wold be close to $100mil
The above are very loose figures but shows $20mil loss, so how is it $100,000,000.00?
Was it 777 gouging Bonza on leases ?
I did an analysis of costs in a prior post. Have a look. My forecast was $120-140m loss which was fairly close to what was occurring.
Bonza had very high startups costs in the tens of millions due to a very delayed start. Essentially, it was dead before it even started. If you seperate the whole Flair thing, including revenue, that little operation has burnt $15-20m. I won’t scare you with wet leasing costs, don’t forget Nauru.
777 Partners lends cash to its subsidiaries at payday loan rates, 20-30%. It all just builds and builds until it collapses.
You need to seperate Fuel, Airport Ground Handling, and Airport charges, they are all significant items. Ground Handling costs have jumped considerably in the past 5 years. Some carriers are looking at pulling some back in house to get some control over it.
Your total figures are quite off the mark also. Crew Training costs here also significant.
There was a lot happening at Bonza, it’s a startup so costs are coming at you from all corners, but there was nil financial discipline here.
Bonza had very high startups costs in the tens of millions due to a very delayed start. Essentially, it was dead before it even started. If you seperate the whole Flair thing, including revenue, that little operation has burnt $15-20m. I won’t scare you with wet leasing costs, don’t forget Nauru.
777 Partners lends cash to its subsidiaries at payday loan rates, 20-30%. It all just builds and builds until it collapses.
You need to seperate Fuel, Airport Ground Handling, and Airport charges, they are all significant items. Ground Handling costs have jumped considerably in the past 5 years. Some carriers are looking at pulling some back in house to get some control over it.
Your total figures are quite off the mark also. Crew Training costs here also significant.
There was a lot happening at Bonza, it’s a startup so costs are coming at you from all corners, but there was nil financial discipline here.
Nomess I agree with what you have stated yes
However taking out the start up costs which are a one off
Taking out the wet leasing
Taking out 777s gouging
It be fair to say that their ongoing operational profit / loss would be around $20mill loss over 15 months?
A loss is a loss, however, trying a bunch of routes with some wins and losses and culling underperforming to be replaced with better routes would also have been a factor
MCY-CFS, PQQ, TMW hang around for a few months while Bonza gave these routes a chance to mature before cutting them costing money
Personally I believe TJ had a great plan to get established without going toe to toe with the big 2and I get the impression there was momentum, however it stifled by his choice with 777 as a backer which ultimately screwed Bonza over
However taking out the start up costs which are a one off
Taking out the wet leasing
Taking out 777s gouging
It be fair to say that their ongoing operational profit / loss would be around $20mill loss over 15 months?
A loss is a loss, however, trying a bunch of routes with some wins and losses and culling underperforming to be replaced with better routes would also have been a factor
MCY-CFS, PQQ, TMW hang around for a few months while Bonza gave these routes a chance to mature before cutting them costing money
Personally I believe TJ had a great plan to get established without going toe to toe with the big 2and I get the impression there was momentum, however it stifled by his choice with 777 as a backer which ultimately screwed Bonza over
Even without the wet leasing, and say only average interest rates, it still had a way to run until any green shoots started forming. That wasn’t a trade secret, the quoted 10 aircraft needed.
Pull out the wet leasing, and perhaps running off average market interest rates, I’m still getting figures around $4-5m cash burn monthly. That’s going off the reported loads to market.
Even with an increase in loads, I’m finding it very very hard to get this to breakeven. And that’s breakeven, isn’t the aim to make some margin on this?
A big risk with these smaller operators, even if they do somewhat become profitable, is they can swing to a loss very quickly, one black swan event, one poor or ‘quiet’ season, and the place can become very unprofitable very quick. Before you know it, you are on your knees, despite making money the year before.
Pull out the wet leasing, and perhaps running off average market interest rates, I’m still getting figures around $4-5m cash burn monthly. That’s going off the reported loads to market.
Even with an increase in loads, I’m finding it very very hard to get this to breakeven. And that’s breakeven, isn’t the aim to make some margin on this?
A big risk with these smaller operators, even if they do somewhat become profitable, is they can swing to a loss very quickly, one black swan event, one poor or ‘quiet’ season, and the place can become very unprofitable very quick. Before you know it, you are on your knees, despite making money the year before.
The following users liked this post: