UPDATE: Bonza hole deepens as administrators investigate financial affairs

UPDATE: Bonza hole deepens as administrators investigate financial affairs

UPDATE (16:00) 03/05/2024: The ABC has reported employees were ‘screaming and crying’ after receiving the news that Bonza will not be paying staff as the carrier entered voluntary administration this week.

“They [Bonza and administrators] said they can’t do anything – they are not in a position to pay anyone,” the source said.

“I would have thought staff would get paid, even half. They get nothing. Zero.

“They’ve put petrol in their car and driven to work five days a week. Rent is due and they’ve got no money.”

According to this source, administrators at Hall Chadwick advised staff to seek emergency government payments.

The Transport Workers Union this afternoon weighed in on the issue saying that wages must be paid as a priority.

“The shock of Bonza falling into administration has barely subsided and workers are being forced to enter Centrelink queues,” the TWU said.

“It’s appalling that Bonza has failed workers so spectacularly and that aviation workers are once again paying the price for a broken industry.

“These are hardworking people with bills to pay and families to feed. They are highly trained. This is a devastating blow and a cause for great worry in a cost-of-living crisis.

“Bonza’s administrators must strain every sinew to find the means to pay these workers urgently. There is no greater priority than this.”

UPDATE (12:00) 03/05/2024 Staff, creditors and plane owners are all awaiting administrator Hall Chadwick’s continuing investigations into the failure of the low-cost carrier.

Sources today revealed to Travel Weekly that four administrators will work through the weekend to get to the bottom of staff entitlements, the future of the sought-after Boeing MAX aircraft – financed by AIP =  and what remains of the airline’s tattered reputation.

A media release from administrators Hall Chadwick sent to Travel Weekly stated that on 29 April the “Lessors of the Aircraft leased to the Company issued notices to the Company terminating their leases in place for the aircraft.”

The release failed to address the financial position of the company stating, “This information remains commercially sensitive, and subject to ongoing investigation, and cannot be made public at this point.”

Refunds are still up in the air.

“The Administrators confirm that the processing or issuing of refunds from the Company cannot occur at this time.

“Customers who have had their flights cancelled should contact their financial institution to discuss available options. Customers may also wish to liaise with any insurance providers, in the event they have travel insurance for the bookings.”

At launch Bonza was owned 49 per cent by 777 Partners and 51 per cent by AIP Capital. It is now owned by Phoenix Aviation Capital, whose ultimate parent is insurer ACap.

bonza’s future on knife edge – 1 may 2024

The fallout from yesterday’s mass Bonza cancellation has been swift, with the failing airline announcing yesterday afternoon that it has gone into voluntary administration.

Australia’s newest airline launched last year in February and promised to bring cheap flights to travellers around the country.

In its first year, Bonza operated 38 routes to 21 destinations, 84 per cent of which were unique.

Asked on SkyNews’ Afternoon Agenda aviation expert Geoffrey Thomas said it looks like it might be the end of budget carrier.

Travel Weekly flew on Bonza’s first-ever flight on 1 February 2023.

“They’re talking about reviewing their business model,” he said. “There’s a bit more than that behind it. We do know that the ownership on those four aircraft changed overnight, changed yesterday.

“That’s why the aircraft aren’t flying today, they’re problems appear to be US-centric.

“Their original backer, 777 partners, they had an airline called Flair in Canada, Bonza was their second.

“In 2022, going into 2023, they were planning on launching three more airlines using the same business model and that never happened.

“We do know there’s been some issues in the United States on the financial side and it would appear as though the leases have been transferred to another entity, and that entity has taken action, overnight.”

Tony Webber, CEO of industry analyst Airline Intelligence & Research and former chief economist at Qantas, told The Guardian that while Bonza’s business model was different and not trying to directly compete with the major airlines, it can be an uphill battle to gain a foothold in the Australian aviation market.

And without access to Sydney airport, Bonza was unable to access a large chunk of its potential market. The government has already flagged a crackdown on the existing regime where slot hoarding has shut out competition.

“The incumbent carriers can be very competitive, particularly Qantas which is hyper competitive,” Webber said. “They realise that to preserve profitability they have to get on the front foot with the competitor.”

Webber said Qantas had roughly 65 per cent market share; together with Virgin, the two operate about 90 per cent of the market.

“You’ve got to have a strong point of difference to the incumbents if you’re going to succeed. Just because an overseas market with a similar population can successfully run four or five carriers, it doesn’t mean [that] will succeed here,” Webber he told The Guardian.

Federal Transport Minister, Catherine King, said there would be no bailout, adding that while the Government had been communicating with them over its finances, it only became aware of the extent of the situation on Tuesday when flights were cancelled.

Ms King said a bailout was “not something that the government has before us” and the matter was with the administrators to decide if the company could continue.

Qantas, Jetstar, Virgin ‘support’ for stranded Bonza passengers

In a statement rivals Qantas and Jetstar said the news about Bonza was “difficult for both their customers and their team members”.

“We extend our thoughts to our aviation industry colleagues and their families – from pilots and cabin crew to flight planners and operations controllers – who will all feel the impact of today’s news.

“If Bonza employees would like to discuss recruitment opportunities within Jetstar and Qantas, particularly in specialised fields which are unique to aviation, we’ve set up a dedicated page on the Jetstar careers website.

“For any customers with a cancelled Bonza flight on a route we operate, to make sure you’re not further out of pocket, you can fly with us at no cost where we have seats available.”

Virgin also stepped in with offers of flights.

The Australian Government has also opened a hotline for passengers affected by Bonza flight cancellations. It is open from 7am-10pm, oh 1800 069 244.

Administrator Hall Chadwick has established a separate number which can be used for aviation sector with queries about the administration process and continued operations 03 8678 1600.

Competition an age-old problem for Australian aviation

Bonza will likely be the next buried in a growing pile of Australian carriers.

Ansett Australia collapsed in 2002 after 66 years of service. At the time it was losing around $1.3 million a day with the Australian and New Zealand governments revealing the carrier had added interest in borrowings of $500,000 a day.

In a 2010 online article by Neil Leiper titled ‘Why Ansett Airlines Failed and How to Prevent It Happening Again’ rings a similar tune to the current state of aviation.

“While Ansett’s management might have been deficient, a factor that seems to have triggered the failure, a deeper issue is its principal cause,” Leiper said.

“It is the policy of competitive markets imposed on Australia’s domestic airlines by successive governments.

“In a country where the resident population and the tourist destinations are dispersed over great distances, there is high dependence on airline services.”

Notable mentions in the pile include Tigerair Australia, Air Australia, BackpackersXpress, Ozjet and TAA.

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