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Air Vanuatu will shed 170 jobs as its liquidator restructures the airline in preparation for a recapitalisation or sale process.
Ernst & Young Australia (EY Australia) said it is looking to “right-size the company’s cost base” as it proceeds with an expressions of interest campaign. The liquidator is currently in discussions to resume “critical routes” in the short term to minimise disruption.
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“The restructuring at Air Vanuatu today is an unfortunate but necessary step to give the business the opportunity to bring on board new investors and capitalise on strong domestic and international demand for travel. This restructuring attempts to position Air Vanuatu for growth into the future,” said Morgan Kelly, partner in strategy and transactions at EY.
“Despite its significant financial difficulties, the Liquidators are committed to identifying a solution to Air Vanuatu. We share the Vanuatuan Government’s view of strong demand for tourism driving international demand, and this to support demand for key domestic routes.”
Air Vanuatu, which employs 441 people, went into voluntary liquidation in early May, with Ernst & Young estimating it owed at least US$66 million (around $99 million). Expressions of interest from potential buyers and investors are due by 7 June.
“The business has access to international airport slots in Brisbane, Melbourne, Sydney, Auckland, New Caledonia and Fiji, as well as owned and leased aircraft and other assets,” said EY.
Air Vanuatu has been experiencing maintenance difficulties with its only jet aircraft, a Boeing 737-800, which has not flown since January. The airline also operates an ATR 72-600 for inter-island travel.
In a March statement, Air Vanuatu said it was leaning heavily on contracted Solomon Airlines flights and another 737 leased from Nauru Airlines.
“While the airline continues to operate over 70 per cent of its current scheduled international flights, it is doing so in a challenging environment, with the airline’s sole Boeing 737 aircraft still awaiting parts and one of the contracted Solomon Airlines A320s now also requiring engineering works,” the statement read.
“Air Vanuatu management confirm the airline is focusing on two major priorities: first, sourcing the required parts from as far afield as Europe, Asia and America to ensure the return of their aircraft to service, and secondly, continuing to operate their schedule with international flights operated mostly by partner aircraft and maintaining domestic schedules with their fleet.
“Globally there are many airlines affected by parts shortages and this is a major concern for the industry.”
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says:What parts are needed for the B737 ???? – I find it very strange that neither QF, NZ, FJ and VOZ appear to have been contacted for interim parts support after all AirVan are our close friends and Neighbours.