SAW’s pain

The hardest hit, though, appear to be the company’s 140 former employees. A number of employees were owed back pay, up to $80,000 in some cases. A number are also facing shortfalls in their superannuation, with the company failing to pass on approximately $500,000 in voluntary salary sacrifice contributions from staff to their super funds.

However, few creditors are expected to see much return with the few remaining assets being little more than office furniture, some aircraft spares and the airline’s Air Operator’s Certificate. All aircraft, cars and computers were leased, with most repossessed just before the airline entered administration.

Started in March 2007 by former Strategic Aviation executive David Charlton and with private – although seemingly cashed up – backers, SAW had grand plans, including the launch of a new airline in partnership with LionAir, developing a touristresort in the Solomon Islands, and even an attempt to take over the ADF’s middle east shuttle contract from incumbent Strategic Aviation using a wet-leased A330.

Australian Aviation can now also reveal that SAW had even planned to aquire Airbus A340-500s to launch services between Sydney and Houston and Newark.

SAW’s core business was focused around the contract charter and wet-leasing operations with its Embraer E-Jets (one E-170 and two E-190s).

This saw the airline operate its aircraft on behalf of airlines including Solomon Airlines and Air Niugini at different times, as well as pitching for a number of charter contracts with mining companies.

“As a competitor, we watched with interest when SkyAir- World started,” Alliance Airlines CEO Scott McMillan told Australian Aviation. “They made lots of announcements that the market had huge growth potential and was being under-provided by the incumbents.

They also criticised our aircraft and operations”.

However, for all the good intentions, SAW’s model involved high costs in an industry where most of its competitors operated older aircraft which were substantially cheaper to lease, making them more competitive on cost. As a result, the company was understood to have operated a number of charters at a loss, burning through its investors’ cash.

The carrier also picked up some limited RPT routes, including operating its E-170 on the Brisbane-Honiara route after it lost a wet-lease contract from Solomon Airlines to OzJet. The carrier also launched RPT services from Brisbane and Cairns to Cloncurry in August 2008, which saw it bring in two ex LOT ERJ-145s to serve the mining industry.

But following the sudden cancellation of its Cloncurry services in February after poor support for the flights, SAW was left with only a few small contracts, most of which offered little margin.

“The majority of those operations they did end up doing had been previously offered to us and we had rejected them on the basis that they were not commercial and we could not see how you would get a commercial rate of return,” said McMillan. “Clearly we can now see why. ” In spite of the difficulties that the company was facing, in January it won a contract from the Attorney General’s Department to operate two weekly services from Perth to Christmas and Cocos (Keeling) Islands. The company announced that it would base an E-190 in Perth to operate the service from April 3.

However, in early February, the airline grounded its E-170 and two ERJ-145s and laid off 40 staff. Charlton later announced on February 22 that the airline was “pausing”its operations to restructure, but would honour its commitments to take on the Indian Ocean Territories. He also said that the airline still planned to launch services from Darwin to Dili and Denpasar on behalf of Timor Air, although the first flight was pushed back until later in the year.

While the seeds of its cashflow problems were set long before its pause, without any operations generating cash SAW was inevitably placed into voluntary administration on March 13. That same day, GECAS repossessed SAW’s remaining aircraft and its two E-190s ferried out immediately. At the time of writing, its former E-170, also leased from GECAS, was still in Brisbane receiving attention at the Jetcare hangar.

In the absence of SAW, Cobham Aviation Services (formerly National Jet Systems) will continue to operate the twice weekly services from Perth to Christmas and Cocos Islands with an Avro RJ70 for the next 12 months.

But the SAW story may not be completely over, with former MacAir owner Terry Byrt expressing an interest in acquiring SAW’s operating certificate to start a new airline which would offer services in regional Queensland. He has also proposed taking over the Indian Ocean Territories contract by April, but that appears to be a long-shot, with Byrt still involved in legal action over the collapse of MacAir.

The hardest hit, though, appear to be the company’s 140 former employees.