Cairns-based regional airline Skytrans has voluntarily ceased operations with immediate effect from Friday January 2, just a day after marking its 25th anniversary.
In a statement posted on the airline’s website, managing director Simon Wild said the low Australian dollar made Skytrans’ business case for operations in 2015 unsustainable. The airline, which lost three Queensland government subsidised regional air routes to Regional Express with effect from January 1, had been planning to continue operating on a much reduced scale, having already made 121 staff redundant.
“Since the loss of a large government contract we had been working on a business model that included focused services on the Cape routes utilising three aircraft,” Wild said in the statement. “This included a reduction of operating costs and a workforce restructure. This 2015 business model indicated a small profit and whilst a reduced version of our current business, it was projected to be a viable albeit smaller business.”
However, Wild said that business case was developed based on a USD-AUD exchange rate of 91 cents, whereas the Australian dollar has recently been trading as low as US 81 cents.
“In addition to the currency challenge it now appears likely that we will have competition on our Cape routes with an inevitable price war – a war where the only winner would be the airline with the deepest pockets. It would be a war I would not be prepared to enter as it would have jeopardised staff entitlements. We have been talking with possible investors and have pursued these interests diligently, but unfortunately every road pointed to unsustainability and as such we could and would not entice investors to a business we did not believe ourselves had a strong future.
“While at 2nd January, 2015 we have a healthy bank balance, due to the uncertain future, I have decided to cease trading.”
The airline says it paid $2 million in staff entitlements to 121 staff made redundant in November and early December, and that a final $2 million was paid to remaining staff on Friday, “and again I confirm that all superannuation payments are up-to-date,” Wild said.
“Today there is no celebration, beyond the pride everyone in Skytrans shares in having delivered a safe, reliable passenger and freight service to communities as diverse as Birdsville and Boulia, Bamaga and Brisbane. We will miss them all, for they have all been relationships built over a lifetime of trust and mutual support, collaboration and shared endeavour, and good old fashioned friendships forged easily between good people.”
Read Simon Wild’s complete statement on the Skytrans website here.