The extent of the Air Australia debacle became clearer on Wednesday when it was revealed the failed budget carrier had just $442,000 in the bank and up to $90 million in debts when its house of cards collapsed on February 17.
The airline’s abrupt end stranded some 4000 travellers overseas, and it now appears clear that it will leave its 500 creditors holding the bag. During a creditors meeting in Brisbane on Wednesday, administrator Mark Korda reportedly said the airline had only about $1 million in assets. The carrier’s jets, terminal space and offices had all been leased.
ANZ Bank was the largest creditor to the airline, with the airline owing it $20 million.
Korda also revealed that the airline had propped up its failing business by taking in $36 million from the forward sale of 100,000 tickets that are now completely worthless. Korda said his firm, KordaMentha, was continuing to investigate whether the airline traded while insolvent.
Air Australia owner Michael James did not attend the creditors meeting on Wednesday. Beyond an angry text message lashing out at The Courier-Mail newspaper, James has not been heard from publicly since the airline collapsed.
Air Australia’s 354 employees will likely be out $3 million of the roughly $8 million in entitlements they were owed by the airline, with the remaining $5 million coming in only thanks to a government compensation scheme.
Korda said the airline’s losses had been “horrendous” and that a sale was “highly unlikely.” Creditors will meet again on March 23 and are likely to vote to liquidate the little that remains.