Situation ‘dire’ for Air Vanuatu as rival carriers look to swoop on flailing airline

Situation ‘dire’ for Air Vanuatu as rival carriers look to swoop on flailing airline
Edited by Travel Weekly


    Ernst & Young Australia (EY) administrators have declared Air Vanuatu was “clearly not in a position to meet its financial commitments” well before the airline went under earlier this month.

    In a report to creditors, EY said Air Vanuatu’s cost base was too high for the size of its operations and had a significant level of debt – currently short $99m to repay customers, staff and lenders in full.

    The report also stated that Air Vanuatu was employing, “a high number of staff for an operation of [its] size.”

    Air Vanuatu collapsed last week with hundreds of passengers stranded across the Pacific, Australia and New Zealand after the airline cancelled flights across the region.

    A number of neighbouring carries in the Pacific are reported to be interested in acquiring the defunct airline including Fiji Airways and Nauru Airlines while Virgin this week applied to the International Air Services Commission to service seven more flights a week from July.

    Situation is ‘dire’ 

    EY’s report for creditors said the situation of Air Vanuatu is dire as it is, “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.

    “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.

    “We note that due to the poor state of the company’s financial records, we are unable to verify whether this information is accurate.”

    Air Vanuatu’s singular Boeing 737 is currently in Melbourne after being repossessed.

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