Air Vanuatu grounds flights after reportedly going into administration, Board dissolved

Photo: Air Vanuatu

Air Vanuatu has cancelled or adjusted some 20 flights to and from New Zealand, Australia and Nouméa after reportedly being placed into administration.

Cancelled flights include services from Port Vila to Auckland on May 8 and 9 and from Auckland to Port Vila on the same dates.

Four services between Port Vila and Auckland on May 10 and 11 have had their times changed.

Six flights between Port Vila and Sydney have been affected, and six flights between Port Vila and Brisbane.

Two flights between Port Vila and Nouméa have had their times changed.

On its website, the airline attributed the changes to “extended maintenance requirements on our aircraft”, and said it was working with partner airlines to minimise disruption. Air Vanuatu said staff would contact impacted passengers.

Cherol Ala, director-general of the Vanuatu Prime Minister’s Office, reportedly responded that a statement would be released when Ernst & Young was on the ground.

One woman took to X (formerly Twitter) to say her Air Vanuatu flight had been cancelled and the airline would put her up in a hotel.

Thirteen hours later, she wrote: “So, probably home today since Air Vanuatu seems unviable. Quite a shemozzle. I feel for the locals who can’t get home to Vanuatu.”

Air Vanuatu has been approached for comment.

In March, the airline said it was awaiting parts for its only Boeing 737 and its contracted Solomon Airlines Airbus A320s also required engineering works.

At the time, the airline said it would use a leased a 737 from Nauru Airlines and Solomon Airlines planes to operate flights.

Last September, Air Vanuatu passengers were left stranded after it cancelled flights while awaiting parts for its 737.

73 Kiwis were amongst hundreds of tourists stranded as a result.

Meanwhile, Vanuatu Daily Post has been informed by Alain Lew, Chairman of the Air Vanuatu Board, that the Air Vanuatu Board no longer exists since the appointment of an Administrator.

Lew, who chaired the new Air Vanuatu board appointed after Prime Minister Charlot Salwal formed the current government, said an administrator was appointed on 06 May, but he did not specify who.

This information was revealed when the Daily Post Newspaper was seeking confirmation on reports that Air Vanuatu has gone into Voluntary Administration and is to be administered by an Accounting Company named Ernst & Young.

When asked for confirmation from the Government of Vanuatu through the Director General (DG) of the Prime Minister’s Office, Cherol Ala, she responded that a press statement would be released when Ernst & Young is on the ground.

Ernst & Young has also been contacted but has not yet responded.

Last month, a former Minister of Infrastructure and Public Utilities reported that Air Vanuatu is facing a serious situation of bankruptcy.

The national airline is currently operating with a Chief Executive Officer (CEO) who allegedly holds the position only because no one else wants to take on the role, given the airline’s continuous state of decline.

Many attempts over the past months to get the members of the Air Vanuatu Board and CEO to address allegations have been hugely unsuccessful as the responsible individuals and Air Vanuatu have not responded, despite the demand from the public concerning Air Vanuatu issues.

More recently, it has emerged that the national flag carrier is facing liquidation proceedings due to legal actions initiated by Isleno Leasing Company Limited (Ltd) over unresolved financial obligations.

This follows a Court of Appeal (COA) judgment (Air Vanuatu Operation Ltd v Isleno Leasing Co Ltd) issued in 2018, which was only released this February after submissions to delay its release until an associated criminal case was heard.

The criminal case has since been heard, and the verdict delivered, leading to the release of the judgment on 16 February 2024.

The COA dismissed the appeal by Air Vanuatu (Operations) Ltd (AVL), which sought to set aside the judgment given in the Supreme Court in favour of Isleno, awarding damages in the order of VT150 million on an interim basis.

The parties had been in litigation since late 2009 over the lease of an aircraft by Air Vanuatu (Operations) Ltd (AVL) from Isleno Leasing Company Ltd, until the release of the COA judgement in February this year.

While the government is expected to provide more transparent answers on Air Vanuatu’s status shortly, it will also confirm whether or not Air Vanuatu has entered Voluntary Administration.

Voluntary Administration is designed to resolve a company’s future as an independent voluntary administrator takes full control of the company.

This allows the director or a third party time to find a way, if possible, to save the company or its business.

The voluntary administrator’s role is to investigate and report to creditors about the company’s business, property, affairs, and financial circumstances. They also manage the end of the voluntary administration and return the company to the directors’ control, approve a Deed of Company Arrangement (DOCA) through which the company will pay all or part of its debts and then be free of those debts, wind up the company, and appoint a liquidator.

A liquidator is a person with the legal authority to act on behalf of a company to sell the company’s assets before the company closes in order to generate cash for various reasons, including debt repayment. While reliable sources have provided insights on Air Vanuatu, official responses from both the government and Air Vanuatu remain elusive despite persistent inquiries.