Vanuatu PM discloses $2 billion fund diversion, Airline crisis unveiled

Vanuatu Prime Minister Charlot Salwai has revealed that the Vanuatu Government’s VT2 billion (US$8.3 million) budget allocated for a new plane was instead used to pay for the lease of the ATR72 aircraft. 

Speaking at a press conference held Tuesday, PM Salwai said the government must prioritise lease payments before considering purchasing a new plane, so they used the funds to pay the ATR lease, which has now been paid in full, totalling VT640 million (US$5.32 million). 

He confirmed that the Boeing 737-800, currently grounded in Melbourne, has been repossessed because the Vanuatu Government did not own it and failed to meet the lease payments, amounting to VT541 million (US$4.5 million). Additionally, there are maintenance costs that Vanuatu cannot afford. 

“The problem began in the year 2000 and continues to this day. Regarding the Commissions of Inquiry (COIs), we have never received the COI reports,” he said. “Even for the COI of the Airbus 220, I was summoned twice but have not seen any report. Unless it is somewhere, for me, it is incomplete.” 

The PM also revealed that the government has settled the outstanding fuel bill of VT28 million(US$232,970) with Societe de Service Petroliers (SSP). 

PM Salwai said all domestic flights have been suspended for maintenance before they can resume services. 

He confirmed that engineers arrived in Vanuatu on Monday to assess the domestic planes in Vanuatu, namely the Twin Otter aircraft, the Islander, and the ATR. 

“I have had to suspend some flights, especially domestic flights, due to the huge required work needed,” he said.

“Our company has faced challenges, and I believe this decision was made at the right time. I have been informed that there may be two aircraft needing certification before they can resume domestic flights. 

“Some of our aircraft have been grounded due to engine problems, posing risks to aviation security. It is imperative to ensure the safety of our passengers before resuming service. 

“In addition to the ATR, the other Twin Otter aircraft and the Islander also require proper maintenance. Safety and security are paramount for continuing our services.” 

For international flights, the PM disclosed that there are currently 4,000 international bookings. 

“I continue to work with other airlines. Monday this week, the Shareholders and Chief Executive Officer (CEO) of Air Nauru visited here, and we had a good meeting with them,” he said. “Today, we will continue discussions with the Liquidator and await their immediate plans to restore international flights. 

“Virgin Australia has increased its flights to five. I witnessed last Sunday that two flights landed in Port Vila. Additionally, Fiji Airways now uses Boeing aircraft instead of ATR, which also flies to Vanuatu. Solomon Airlines made its first flight carrying the Permanent Secretary of Foreign Affairs, delegations, and board of directors. Today, they will meet with the Liquidator and provide a report to the shareholders and Council of Ministers (COM) to determine our next steps. 

“Also, they flew to Auckland, and the Recognised Seasonal Employer (RSE) workers in Auckland may arrive today. In terms of international flights, we are seeing a flow of tourists and visitors again.” 

PM Salwai also mentioned that in recent days, several airline companies have come forward to offer assistance, and he will refer them to the Liquidator. 

“The present Liquidator is considered one of the best companies globally, and I am pleased they have accepted the task,” he said. 

“They will assess all incoming demands to ensure profitability. There are future plans for Air Vanuatu being developed by the Shareholders who are working closely with the liquidator. 

“I want to assure Air Vanuatu employees that the government will continue to work with the Liquidator to ensure business operations continue as usual. Once the planes are ready, staff and pilots of Air Vanuatu will resume services. 

“Regarding creditors, the government is one of them since it loaned a significant amount to Air Vanuatu and holds security over the loans obtained from BRED Bank and Vanuatu National Provident Fund (VNPF),” he said. 

He also addressed rumours circulating about the government borrowing money from the VNPF, saying that the government has not borrowed any money from the VNPF.