RIP Bonza
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Microphone drop
On 21 May 2024, the Administrators were informed by 777 Partners, who we understand to be the ultimate holding company of Bonza and 777 Holdco domiciled in the United States, that it may wish to propose a Deed of Company Arrangement (DOCA) to restructure the Companies as a group. The Administrators have not yet received a proposal for a DOCA from 777 Partners.
On 21 May 2024, the Administrators were informed by 777 Partners, who we understand to be the ultimate holding company of Bonza and 777 Holdco domiciled in the United States, that it may wish to propose a Deed of Company Arrangement (DOCA) to restructure the Companies as a group. The Administrators have not yet received a proposal for a DOCA from 777 Partners.
I can only think of two potential interested parties. Someone wanting to run a wet leasing operation, before Skytrans joins the party, or someone wanting to copy MinRes. Either way, CASA will have a field day with any new owner.
Either way, CASA will have a field day with any new owner.
Somehow though I can’t see anyone else giving this business a run. There just isn’t enough patronage outside of the capital cities.
I can see someone wanting to start a wet lease operation however. They won’t be purple and they certainly won’t be selling budgie smugglers. However, it gets messy as they won’t want all the financial baggage. All they want is, the AOC, Manuals, and somewhat something of a Flight Ops Department.
Price? Wouldn’t be much. $10-20m with no debt tied to it.
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The counsel for the administrator seemed to me to be a bit short of knowledge and therefore unhelpful to the judge in understanding the regulatory consequences of a change of control of the AOC-holding entity. (Remember: There can be no ‘new owner’ of an AOC. The AOC can only ever be held and owned by one person. Assets owned by a company are not owned by the shareholders.)
At one stage the judge raised the question whether CASA has a power of veto over share sales resulting in a change of control of an AOC-holding entity, the answer to which is clear, and counsel seemed to fudge it. Then there was a discussion between the judge and counsel about how important the pilots are to aviation safety - an obvious but largely irrelevant conclusion in the circumstances, because I’m not aware of any circumstances in which CASA has moved to suspend or cancel an AOC merely on the ground, alone, that an AOC-holder has no pilots temporarily. (Are any of Bonza’s pilots actually hanging around? I would have thought they’d skip to greener pastures ASAP.)
The gnarly regulatory issues are about who the key personnel – including the CEO – will be and what the chain of command and other arrangements fundamental to safety will be after the change in control, and whether CASA considers all that appropriate. That and the minor issue of financial viability.
If I were a potential buyer of the controlling interest (no chance of that, as I don’t want to risk making a small fortune out of aviation) I’d be seeking assurances from CASA about whether my proposed key personnel and chain of command and all the other proposed arrangements relevant to holding an AOC, and financial viability, would attract regulatory flies. I imagine that even if the answer from CASA was that my proposed arrangement are OK in principle, it would be qualified with: But of course we have to first be satisfied that the proposed arrangements have been implemented by you and are working in fact.
At one stage the judge raised the question whether CASA has a power of veto over share sales resulting in a change of control of an AOC-holding entity, the answer to which is clear, and counsel seemed to fudge it. Then there was a discussion between the judge and counsel about how important the pilots are to aviation safety - an obvious but largely irrelevant conclusion in the circumstances, because I’m not aware of any circumstances in which CASA has moved to suspend or cancel an AOC merely on the ground, alone, that an AOC-holder has no pilots temporarily. (Are any of Bonza’s pilots actually hanging around? I would have thought they’d skip to greener pastures ASAP.)
The gnarly regulatory issues are about who the key personnel – including the CEO – will be and what the chain of command and other arrangements fundamental to safety will be after the change in control, and whether CASA considers all that appropriate. That and the minor issue of financial viability.
If I were a potential buyer of the controlling interest (no chance of that, as I don’t want to risk making a small fortune out of aviation) I’d be seeking assurances from CASA about whether my proposed key personnel and chain of command and all the other proposed arrangements relevant to holding an AOC, and financial viability, would attract regulatory flies. I imagine that even if the answer from CASA was that my proposed arrangement are OK in principle, it would be qualified with: But of course we have to first be satisfied that the proposed arrangements have been implemented by you and are working in fact.
(Are any of Bonza’s pilots actually hanging around? I would have thought they’d skip to greener pastures ASAP.)
I’m not aware of any circumstances in which CASA has moved to suspend or cancel an AOC merely on the ground, alone, that an AOC-holder has no pilots temporarily.
I understand Virgin kept the Tiger AOC inactive without any personnel attached to it, however I’ve since been told it’s now been cancelled and is officially dead.
If you quit then you are not eligible for anything, having said that redundancy payouts are generally way down the creditor list.
I said the AOC holder having no pilots "temporarily". Are you aware of how long Virgin "kept the Tiger AOC inactive without any personnel attached to it" before the AOC was cancelled, or of why CASA cancelled it?
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Bonza for the win!
https://www.onboardhospitality.com/o...ners-revealed/
Silver: Air France
Bronze: Malaysia Airlines
https://www.onboardhospitality.com/o...ners-revealed/
Winners
Low Cost Carrier:
Gold: BonzaFull-service airline:
Gold: Hawaiian AirlinesSilver: Air France
Bronze: Malaysia Airlines
Gold Coast Airport are exercising their rights under their Conditions of Use.
However, their conditions should not prevail over the requirements of the Corporations Act 2001 with regards to paying out creditors; simply put, you cannot contract around the law. The airport cannot obtain preferential treatment regarding payment of their debt; they'll be treated as a unsecured creditor and gets cents on the dollar, maybe nothing, just like every other unsecured creditor. If push came to shove, the Aircraft Lessor will get a court order requiring the airport to release the aircraft, and they would likely get a costs order against the airport as well. If the airport persists it will ultimately be a matter for the court.
However, their conditions should not prevail over the requirements of the Corporations Act 2001 with regards to paying out creditors; simply put, you cannot contract around the law. The airport cannot obtain preferential treatment regarding payment of their debt; they'll be treated as a unsecured creditor and gets cents on the dollar, maybe nothing, just like every other unsecured creditor. If push came to shove, the Aircraft Lessor will get a court order requiring the airport to release the aircraft, and they would likely get a costs order against the airport as well. If the airport persists it will ultimately be a matter for the court.
Last aircraft is being held hostage by OOL still, remarkably short sighted action by OOL management, seeking to be a preferential creditor. I am sure leasing circles are abuzz with the news of the treatment, future leases worldwide are likely to have OOL and associated airports excluded from operations of said assets in the future because of this action, which will be more costly by far than any BONZA bill.
Think QAL and their lawyers will find that Australia being a signatory to the Cape Town Convention and a 777 Partners entity being the secured creditor on the international register is all that matters...
The primary aim of the Convention and the Protocol is to resolve the problem of obtaining certain and opposable rights to high-value aviation assets, namely airframes, aircraft engines and helicopters which, by their nature, have no fixed location. This problem arises primarily from the fact that legal systems have different approaches to securities, title retention agreements and lease agreements, which creates uncertainty for lending institutions regarding the efficacy of their rights. This hampers the provision of financing for such aviation assets and increases the borrowing cost.
As of 16 June 2016, there are 65 Parties to the Convention. A full list of signatory parties is available here .
Predictability & enforceability. By creating an international interest recognized in all of the Contracting States and establishing an international electronic interest registration system, the Convention and Protocol improve predictability with respect to the opposability of the securities and the interest held by sellers of aviation assets. Indeed, it is estimated, based on World Bank data, that the mean worldwide contract enforcement delay is 10 months. The ratification of the Convention and the Protocol reduces this delay to two months (Linetsky , 2009).
Cost savings. The Convention and Protocol are intended to reduce risks for creditors, and consequently, the borrowing costs to debtors, through the resulting improved legal certainty. This promotes the granting of credit for the acquisition of more modern and thus more fuel-efficient aircraft. The airlines of States that adopt the Convention and the Protocol may receive a ten percent (10%) discount on export credit premiums. For example, it was calculated that the adoption of the Convention will enable Australian airlines to save $330,000 on the purchase of a new ATR 72 and $2.5 million on the purchase of an Airbus A380 (cf. Flightglobal).
Cape Town Convention and Protocol
Introduction
The Convention on International Interests in Mobile Equipment (pdf) was concluded in Cape Town on 16 November 2001, as was the Protocol on Matters Specific to Aircraft Equipment (pdf). The Convention and the Protocol, adopted under the joint auspices of ICAO and UNIDROIT, shall be read and interpreted together as a single instrument (Article 6(1) of the Convention).The primary aim of the Convention and the Protocol is to resolve the problem of obtaining certain and opposable rights to high-value aviation assets, namely airframes, aircraft engines and helicopters which, by their nature, have no fixed location. This problem arises primarily from the fact that legal systems have different approaches to securities, title retention agreements and lease agreements, which creates uncertainty for lending institutions regarding the efficacy of their rights. This hampers the provision of financing for such aviation assets and increases the borrowing cost.
As of 16 June 2016, there are 65 Parties to the Convention. A full list of signatory parties is available here .
Advantages of the Convention and the Protocol
Predictability & enforceability. By creating an international interest recognized in all of the Contracting States and establishing an international electronic interest registration system, the Convention and Protocol improve predictability with respect to the opposability of the securities and the interest held by sellers of aviation assets. Indeed, it is estimated, based on World Bank data, that the mean worldwide contract enforcement delay is 10 months. The ratification of the Convention and the Protocol reduces this delay to two months (Linetsky , 2009).
Cost savings. The Convention and Protocol are intended to reduce risks for creditors, and consequently, the borrowing costs to debtors, through the resulting improved legal certainty. This promotes the granting of credit for the acquisition of more modern and thus more fuel-efficient aircraft. The airlines of States that adopt the Convention and the Protocol may receive a ten percent (10%) discount on export credit premiums. For example, it was calculated that the adoption of the Convention will enable Australian airlines to save $330,000 on the purchase of a new ATR 72 and $2.5 million on the purchase of an Airbus A380 (cf. Flightglobal).
Which is all good, until the courts decide not to enforce Cape Town, as happened with Willis Lease and the Virgin engines case. India is also a signatory to Cape Town - much earlier than Australia was - but that has been an absolute shambles for the lessors in multiple cases. Similar shenanigans going on in Vietnam.
Let's be honest, the lessors know the risks and charge accordingly. What usually happens is that they clear the debt accrued by the aircraft to the airport, the airport releases the lein, lessor flies their bird away and the world still turns. In this case, as AIP Capital are a bunch of snakes (I mean, literally their main vehicle is called 'Phoenix Aviation Capital'), they appear to be refusing that, effectively creating a headache for the administrators and leaving everything in a stalemate. The longer it goes on for, the more the incentive is with AIP to just settle it, and in the meantime I am sure that OOL will happily just let it sit there, amassing more parking fees.
Let's be honest, the lessors know the risks and charge accordingly. What usually happens is that they clear the debt accrued by the aircraft to the airport, the airport releases the lein, lessor flies their bird away and the world still turns. In this case, as AIP Capital are a bunch of snakes (I mean, literally their main vehicle is called 'Phoenix Aviation Capital'), they appear to be refusing that, effectively creating a headache for the administrators and leaving everything in a stalemate. The longer it goes on for, the more the incentive is with AIP to just settle it, and in the meantime I am sure that OOL will happily just let it sit there, amassing more parking fees.
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For all intents and purposes, the Cape Town Convention is Australian law. The courts cannot decide to turn it on or off at their leisure.
What the two courts dealt with in the Willis/Virgin engine lease matter was the practical application of the Aircraft Protocol Article XI(2) requirement for the creditor, Willis, to be "given possession" of its assets under the Administration. Willis wanted the engines shipped back to the US, whereas the Administrators sought to fulfil their obligations by allowing Willis to take possession here in Australia. Both courts sided with the Administrators.
You can pretty much lay odds that every lease agreement written since that judgement will outline in quite specific detail the practical obligations that are attached to being "given possession" in the event of insolvency.
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Well according to the AFR they have no buyers and tomorrow is the deadline for EOI. Staff expected to be terminated next week. Liabilities have certainly blown out from the original figure quoted.
ASIC now launching inquiries. Directors will be the firing line if traded insolvent. Tim Jordan and his CFO better have a chat to Michael James from Air Australia to get the rundown on what is about to occur next.
ASIC now launching inquiries. Directors will be the firing line if traded insolvent. Tim Jordan and his CFO better have a chat to Michael James from Air Australia to get the rundown on what is about to occur next.
If you’re a corporate criminal and you sit still in plain sight for long enough, the corporate watch-puppy will ferociously gum and slobber on your leg until a faint rash appears.
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