The inside story behind Bonza’s collapse

The breathless set of events that followed was seemingly inevitable, given Bonza found itself in the bizarre position of being an airline without any actual aircraft. At 8am, customers were informed all services had been “temporarily suspended”, by 4pm, the carrier was placed into voluntary administration, and days after that, services were effectively grounded for the foreseeable future. Fast forward two months and all of its staff were sacked after no serious bidders emerged. Bonza would later be liquidated, owing more than $133 million to 60,000 people and businesses, despite only trading for little more than a year. 

It was a blunt end to a genuinely revolutionary idea conceived by affable chief executive Jordan, who spent 14 years attempting to find an investor to bring it to life. What made Bonza unique was that it almost exclusively targeted routes that were not flown by any other carrier. Its strategy relied on flying from smaller destinations to smaller destinations rather than simply hopping to, or between, larger capital cities. In effect, it was encouraging customers to take holidays that wouldn’t have been practical previously because they would have involved an expensive layover or a long drive. 

The critics were quick to scoff that it would never work. Virgin CEO Jayne Hrdlicka pointed out Australia’s population was too small to support its plan, Qantas CEO Alan Joyce warned Bonza was entering “the most competitive market in the world”, while Rex’s John Sharp sniffed he couldn’t imagine why anyone would book its service between Coffs Harbour and the Sunshine Coast. Yet, quietly, Bonza was proving its doubters wrong. By the end of its first year, the carrier claimed to have flown 750,000 customers, with 1.5 million having downloaded its app. 

In truth, Bonza failed after owner 777 Partners, with whom Bonza was reliant for funding, abruptly stopped paying the bills. What’s intriguing is how genuinely in the dark Jordan and his directors appeared to be about this rug pull. Just two weeks before the firm went under, for example, he strongly denied a story in the AFR suggesting 777 Partners had appointed a consultancy to run the rule over its books. “KordaMentha has not been appointed as financial advisors to Bonza, or in any other capacity,” he retorted. Privately, one senior executive even whispered to Australian Aviation that the airline was considering suing the newspaper for defamation. 

Yet within just hours of Bonza losing its aircraft, 777 Partners somehow found $31 million to pay English Premier League team Everton as part of its audacious $400 million bid to take over the club. A move that, even more mysteriously, fell apart just weeks later. Three months on from Bonza’s collapse, 777 Partners’ major directors have all but vanished, failing to release a single statement on the carrier’s collapse.

Shortly after Bonza broke cover in October 2021, Tim Jordan appeared on the Australian Aviation Podcast to introduce himself and his idea to the industry. I asked him, where did his passion for aviation come from? “I’m a low-cost aviation die-hard,” he told me. “I love what we do. It’s absolutely fantastic. It gets me out of bed in the morning and has done for 20 plus years because we bring people together. We make family reunions happy. We get people to parties and funerals and holidays that they wouldn’t otherwise go on.” His down-to-earth enthusiasm was the mark of the man. Later, I would admire how his interviews were always refreshingly absent of the kind of corporate mumbo jumbo spoken by his peers. He even dressed differently, too. Rather than wear a suit, for example, Jordan was only ever seen wearing his simple black Bonza polo shirt, complete with its trademark purple thumbs-up logo stitched into the top corner. 

For a modest character, Jordan’s career was anything but boring. Beginning as an accountant for a now-defunct British charter airline based in Gatwick, he hauled himself up the ladder to work with United Airlines in the US and Europe before helping create the Star Alliance in 1997. Five years later, he was poached by a fledgling Virgin Blue to oversee its aircraft and network planning, eventually expanding its 737 fleet from 15 to 49 aircraft. More top positions in the Philippines and India followed before he took the gamble of moving to Kazakstan to set up low-cost carrier FlyArystan. Bonza, though, was always the dream. 

“Back in 2016, we thought there was an opportunity in the market then for a different sized and shaped Bonza. It didn’t come to pass for a number of reasons, and then the phone rang, and I packed a suitcase for Kazakhstan. Essentially, while we were in lockdown there, everything changed in the Australian domestic market. I remember having a conversation in my kitchen with my wife and saying, ‘My goodness, it’s got to be time to revisit Bonza.’ And so we did. We headed back in June 2020, and we are now where we are today.” 

The plan would work, he explained, because Bonza faced no real competition. “Australia is the eighth in the list of the largest 15 domestic aviation markets in the world, but the only one without an independent, low-cost operator. We will focus wholly on the leisure market, and this is about stimulating new points which are currently not joined together. There are some truly wonderful airlines already across this country, and this isn’t about stealing a market from any of them. It’s about creating a brand-new market, which has already been executed by a very similar model around the world.” Bonza’s main competitor, he continued, was the TV. “That’s the alternative. For someone to get on an aircraft and go away for a three or four-day weekend isn’t an option in these locations. Either they drive, or they don’t go.”

As for what that “different-sized” Bonza might have been, Jordan has never spoken publicly about his original plans. Rumour has it, though, that he was aiming to launch the carrier with a fleet of smaller, 72-seat, twin turboprop aircraft, likely ATRs, as opposed to the larger 186-seat 737 MAX fleet eventually inherited with 777 Partners. How 777 obtained those aircraft is again open to debate. But reports suggest they were able to purchase them from Boeing, mid-COVID, on the proviso they would only use them to set up an airline, rather than simply sit on them for future leasing. Thus how, the story goes, the group came to be introduced to Jordan, and his ambitious idea.

And so, who were 777 Partners, I asked? They were, he responded, a “private investment firm” based in Miami. “They focus on six or seven different streams of investment. Very importantly, they’re private investment, not private equity. They have about 50 different portfolio companies, and we are now one of them. They have a significant share in Canada’s only independent, low-cost operator, Flair. They also have an aircraft leasing business, which is quite convenient for us, as well as a number of aviation technology companies. In terms of assets under management, the last time I looked, they had assets of US$6 billion, so they’re significant. 

“And, importantly, they’re not getting into this for a short-term venture – they’re getting into this for the long-term.”

When Bonza first announced itself to the world, it was with a big bang. The press release promised that the airline would launch “early” next year with a fleet of brand-new 737 MAX aircraft, while a PR agency immediately offered media interviews with both Tim Jordan and 777 Partners’ founder Josh Wander, from his office in Florida. Curiously, the company unveiled its now infamous purple branding on day one, despite admitting it had yet to lock in a single route. Within months, a starry team of executives was announced, including alumni from Virgin Blue, Jetstar and Swissport. Jordan later revealed Bonza would even increase its fleet from just three to eight within its first year of operation. Everything, it seemed, was designed to create the impression that Bonza meant business. “There is a huge opportunity to both do good and do well by democratising air travel through lower costs,” said Wander. “We want to increase consumer choice and make travel more affordable and more accessible for all Australians.”

Not everyone, though, was convinced. John Sharp, Rex’s then-deputy chairman, was among the first to publicly doubt its ambitious timetable. “Bonza is claiming that they will be in operation early next year – that’s only three months away,” he said. “And yet to do that, they’ve got to get a high-capacity air operator certificate, and you won’t get that in under 12 months – if you can do it in that time. And so, their start date, I don’t think, is ever likely to occur.” 

Sharp’s words felt eerily prophetic as Bonza’s launch date came and went without services beginning. Instead, the airline was forced to fill the void by announcing its staff uniform – cabin crew would be allowed to wear shorts or sneakers – and giving future passengers the opportunity to vote on the ‘real Australian’ names of the aircraft (think Bazza, Shazza, and Sheila). In fact, it wasn’t until January 2023, some 15 months after its initial unveiling, that CASA finally gave Bonza the green light to begin. Its first flight took off just two weeks later, flying from the Sunshine Coast to the Whitsunday Coast on 31 January. Jordan, though, was adamant the delay and missing the recent festive getaway hadn’t been too big a problem. “It’s not about one Christmas — it’s about all Christmases to come,” he told Australian Aviation. 

Bonza’s initial network, announced to coincide with the first flight taking off, would see it service 27 routes, with two airports, Melbourne and the Sunshine Coast, acting as bases for the airline. As the year rolled on, the network was slowly rolled out, with new services added roughly every couple of weeks. But then, in July, two major announcements came out of nowhere. Bonza was to cut five of its underperforming routes from its original route map but would replace them by adding a third base in the Gold Coast. To be fair, Jordan had previously hinted he would be ruthless in axing underperforming services – “Our factory moves”, he preached – but it was nonetheless surprising to see routes written off so quickly. 

As the year rolled on, though, both Jordan and 777 Partners began to talk ever more loudly about their frustration of not being able to access take-off slots at Sydney Airport. Bonza, along with Rex, lamented the so-called 80-20 rule that meant established airlines could keep the plum, peak-time slots forever so long as they didn’t cancel more than one in five flights. With limited space, new entrants were effectively locked out, as the old guard “squatted” in place. “Sydney is getting close to a quarter of the population,” Jordan told a parliamentary committee. “If we as a business are unable to access that market, it has a significant impact on us.” Ominously, Manish Raniga, a senior figure at 777 Partners, even declared that the “length of runway” for Bonza would eventually “run out” if it couldn’t gain appropriate access to the NSW capital.

Yet, on the whole, as 2023 drew to a close, Bonza’s first year, outwardly at least, appeared to be something of a success. Its fleet had grown to six, with two aircraft wet-leased from its sister airline Flair, while its passenger numbers seemed far beyond what most critics were expecting. Carly Povey, Bonza’s chief commercial officer, said that during holiday periods, routes such as Albury to Sunshine Coast were 100 per cent full on most days, while average load factors in off-peak periods were in the 70 per cents. Jordan, meanwhile, told the Australian Aviation Podcast that the carrier was “not so far away” from breaking even. “We want to be well on our way to profitability this year,” he said. 

However, not quite breaking even also meant the airline was reliant on its owners, 777 Partners, to pay its bills. And in January 2024, Jordan must surely have sensed trouble when it emerged aircraft lessors in the UK were preparing to take the investment group to court, arguing it was owed $44.7m in unpaid fees and damages. More worrying still, the claims related to aircraft leased to Flair, Bonza’s sister airline that it was sharing aircraft with. “777 Partners cannot just ignore its financial and contractual obligations,” the lessors said in a statement. “This legal action is a last resort.” 

Closer to home, Bonza’s outstanding payments were mounting up. A later investigation by the administrators revealed that, in January, Bonza owed nearly $17 million to creditors. However, the money coming the other way, from 777 Partners, was trickling to a near halt, with less than a million dollars arriving in the 30 days until the end of the month. The cash provided to the airline from Miami was also no gift, but a loan expected to be paid at a later stage. By 31 January, Bonza already owed 777 Partners nearly $65 million.

Yet outwardly, Bonza staggered on, publicly celebrating the first anniversary of its first flight, the “Bonzaversary”. A new service from the Sunshine Coast to Launceston launched and, for the first time, the airline allowed customers to book flights from its website, rather than being restricted to its app. Lorie Argus, CEO of Melbourne Airport, praised the carrier and said it had “delivered on its promise of low-cost flight connections for all Australians.”

Behind the scenes, though, a very different story was emerging. The AFR reported that on 22 March, the founder of Bonza’s aircraft lessor wrote to its parent company’s financier detailing plans to wind Bonza up and “get the planes out”. Astonishingly, seven days later, that email chain was, the AFR claimed, inadvertently sent to the airline’s CFO, Lidia Valenzuela. “A source with direct knowledge of the situation said the email sent Bonza into panic, as they tried to confirm whether their leases had been paid by 777,” revealed the newspaper. On 17 April – just two weeks before the company’s collapse – the administrator explained that a “notice of default” had, in fact, been sent to executives regarding its four Bonza-owned aircraft. 

Fast forward to 10 May, two weeks post-administration and Jordan fronted up a virtual meeting of thousands of creditors. “It is most appropriate today that I apologise to our wonderful Bonza team and partners who’ve supported us on this wonderful journey and the tens of thousands of customers who’ve made forward bookings,” he said. “To each of you, I would like to sincerely apologise.”

Two months after Bonza’s planes were taken away, the administrator, Hall Chadwick, published its report into what caused the airline’s collapse. Funding from 777 Partners, it concluded, was “sporadic”, “delayed” and “ultimately insufficient” to adequately maintain the company’s operations. By the end of April 2024, it revealed, Bonza owed nearly $39 million to external creditors, most of whom would have been ordinary customers and aviation support businesses. 

In particular, it highlighted the role of Steven Pasko and Adam Weiss, who were directors of both Bonza as well as 777 Partners. “These dual duties created a situation of conflict for Pasko and Weiss, where the interest of the company was to continue to be in possession of the aircraft to continue the company’s operations, whereas for 777 Partners, it appeared to be to terminate the funding of the company and the lease agreements.” Digging by the administrators revealed that from “at least 22 March”, 777 Partners had resolved to cease funding Bonza, seemingly backing up earlier newspaper reports. Significantly, the administrator’s report revealed that neither Pasko nor Weiss provided any input into its investigation into the company. 

In mid-May, it emerged that Pasko and Wander, the man who unveiled Bonza in 2021, had stepped back from their roles as managing partners of 777. Days later, reports claimed 777 Partners had called in a restructuring firm to provide advice on “operational challenges”. Meanwhile, one of its asset managers, London-based Leadenhall Capital, alleged that 777 was operating a “giant shell game at best, and an outright Ponzi scheme at worst”, and the organisation was “a house of cards on the brink of collapse”. It’s just one of several lawsuits currently active against 777 Partners globally. 

The website of 777 Partners, though, is still active, and has a section detailing its “values and impacts”. The organisation, it explains, has seven “core values”, which it details as being curious, brave, agile, tenacious, entrepreneurial, unified and accountable. “We take full accountability for our actions,” it explains. “We act like owners and operate with high integrity in everything we do, seeking to have a positive and enduring impact on the people and communities we serve.”