BONZA AIRLINES: Two months to find a buyer by 29 July

The Federal Court has granted the administrators of Bonza Airlines, Hall Chadwick, two months to find a buyer.

Barrister James Hutton, for the administrators, told the court that it would likely be better for creditors if the company was kept out of liquidation. This would give the best opportunity for the airline to sell its most valuable asset, its airline licence. And if sold, that was likely the best outcome for creditors.

Background

The airline’s failings are complex and tied to the financial issues of its financial backers. That includes 777 Partners and aircraft lessors. The owners of the aircraft have taken possession of all of Bonza’s aircraft. It’s effectively an airline without aircraft.

Bonza Airlines collapsed earlier this month, reportedly with debts in the vicinity of AU$ 110 million. An initial meeting of creditors was held on 15 May. Another meeting is proposed to be held prior to the new deadline of 29 July.

Interested parties

The administrator previously said that half a dozen parties were interested in purchasing the airline. Their interest is mainly for its operating license, although one party, VietJet, has reportedly already dropped out.

Creditors

Including travellers who have bought advance fares, brings the total number of creditors to 58,428.

Customers with forward bookings will be treated as contingent creditors, retaining bookings for future flights if the airline continues operating.

Creditors were told at the first meeting that the airline owed nearly $77m in two loans. An additional $16m is owed to trade creditors and a further $10m in rent to landlords.

About AU$ 5m is owed in staff wages and annual leave entitlements. Government authorities like the Australian Taxation Office are owed AU$3 million.

If the airline goes into liquidation, then, employees may be entitled to redundancy payments, a further financial pressure on the airline.

2PAXfly Takeout

Looks like everyone will need to be patient to find out what is the outcome of Bonza’s administration process. In the meantime, its not flying, and ticketholders are faced with the dilemma of kissing their tickets goodbye and booking with another airline, or hoping that some kind of miracle occurs so that their tickets will be honoured.

I don’t believe in miracles. (to misquote a former Australian Prime Minister)