The national airline Air Vanuatu has confirmed that its Boeing 737 is at risk of repossession by its lessor.
Air Vanuatu owed USD$8 million lease payments to American Leasing Company (ALC), which is approximately VT897 million, a source revealed to the Vanuatu Daily Post.
According to the source, Air Vanuatu has been given three-months’ notice to meet this outstanding, starting mid of this month to December.
While Air Vanuatu did not confirm nor deny this figure, it confirmed it has agreed with the lessor to sort out the payments within the given period.
The airline stressed that it did not want to lose the aircraft, hence the Chief Executive Officer (CEO), Atu Finau, is speaking with ALC on solutions, since the lease ends in 2024.
Air Vanuatu said it has agreed with ALC an ‘interim plan’ in which the government will lessen the debt gathered during COVID-19 situation, whilst the threat to lease Boeing 737 remains.
Board Member of Air Vanuatu and Private Advisor to the Caretaker Minister of Foreign Affairs, Robert Bohn, said the government will meet the lease payments.
There are no discussions of the government taking funds from the Vanuatu National Provident Fund as mentioned by rumours, the Daily Post was told.
Former CEO of Air Vanuatu, Joseph Laloyer, suggested that Air Vanuatu should combine with Airports Vanuatu, cut down costs, and review salaries and the number of staff. He said losing 737 could lead to the downfall of the airline.
He recommends Air Vanuatu to talk with Air Bus to link with ALC, since they have largely invested in Air Bus.
Air Vanuatu replied that discussions have been held made with Airbus to find a solution of working with both parties.
Regarding cost cutting and reducing the number of workers, Air Vanuatu said it has been doing that since the COVID-19 pandemic.
Laloyer said Air Vanuatu should ask him for assistance since he has more than 35 years of experience in this field.
Meanwhile, CEO Finau said the recent return of one of the Twin Otter aircrafts was pre-arranged.
He explained in a statement that the airline has a plan in place called the Recovery Plan which has been presented to stakeholders since early 2021.
“This plan has always included adding other aircraft to the fleet and the return of this twin otter at the end of its lease. The arrival of additional aircraft to support the domestic routes remains part of the plan and is anticipated before the end of 2022,” he said.
“Like every airline in the world, the recovery from the impact of the COVID-19 situation is challenging and requires careful planning and funding. Governments and financiers have played an important role in supporting airlines globally to maintain and recover operations.
“Similarly, the Vanuatu Government has made financial arrangements that will provide debt relief to the National Airline which is a state-owned entity. This commitment has been endorsed via a Council of Ministers resolution that was passed and signed just before the government was dissolved.
“Given the subsequent dissolution of the government, it is expected that implementing this financial arrangement may be complicated and even delayed.
“The airline confirms that all financial arrangements are with the government and have no relation whatsoever to VNPF. At the airline’s request, the Prime Minister and the Shareholders have agreed to meet with the Board to further discuss this matter and seek solutions today.
“Meanwhile, the airline has reiterated statements that were released to the media in detail in July, which confirmed that all three safety audits conducted this year were all passed. We are absolutely committed to safety and will do what is required to maintain our safety standards,” said CEO Finau.