Bonza has entered voluntary administration after the company which owns its aircraft lessor attempted to repossess its planes, leaving hundreds of travellers stranded across the country on Tuesday.
Passengers attempting to fly from the Sunshine Coast, Melbourne, Gold Coast and Avalon arrived at the airports on Tuesday morning to find their flights had been cancelled.
The company has appointed Hall Chadwick as voluntary administrators for Bonza’s operating and holding company, according to ASIC disclosures.
Bonza’s board directors have convened an emergency meeting for Tuesday afternoon to discuss a way forward for the struggling carrier. One source, speaking on the condition of anonymity, said they expected the airline to extend the temporary suspension until it could find a way to continue operating.
Bonza chief executive Tim Jordan apologised to customers in a statement and said he was considering the viability of the business, but did not confirm or deny whether any of its aircraft had been repossessed.
Some aircraft have been seized by AIP Capital, an investment house owned by the parent of 777 Partners, ACAP, to recoup money owed to investors, sources close to the matter told this masthead. 777 Partners originally bought the aircraft and issued long-term leases to Bonza during COVID-19.
AIP confirmed the aircraft had been transferred to a new vehicle, Phoenix Aviation Capital, which is owned by insurance giant ACAP, on April 9.
AIP has since moved to take possession of three Bonza aircraft to send them back to Canada, having already seized one of its 737 Max-8s, named Bruce, earlier this week.
777 Partners is being advised by restructuring firm KordaMentha, which declined to comment. The appointment of KordaMentha was first reported by the Australian Financial Review last week and stridently denied by Bonza.
“Bonza has temporarily suspended services due to be operated today [Tuesday] as discussions are under way regarding the ongoing viability of the business,” Jordan said in his statement.
“We apologise to customers who are impacted by this, and we’re working as quickly as possible to determine a way forward that ensures there is ongoing competition in the Australian domestic aviation market.”
Qantas and Virgin have both offered to support passengers on complimentary flights to the airport closest to their final planned Bonza destination. The majority of the routes Bonza flies are not offered by any other airline.
The airline launched its ambitious plan to fly to largely unserviced parts of Australia with low-cost fares in January last year. It dropped a number of routes last year due to lack of demand, in an attempt to boost the reliability of its more popular services.
Transport Minister Catherine King said the government would establish a hotline for those stranded.
“I am aware of reports this morning of Bonza flights being cancelled. I have spoken to Qantas and Virgin CEOs this morning and both airlines stand ready to assist stranded passengers needing to get home,” King said. “My department has reached out to Bonza and our expectation is that they keep passengers informed of their options and their consumer rights.”
Bonza’s fleet was originally owned by its parent company, 777 Partners, but the private equity group’s creditors have since created a new vehicle that owns the company’s 30 Max-8 aircraft.
Over the past year, Bonza has been hamstrung by fleet issues, with many of the purple planes scheduled to be used by the airline instead redirected to one of 777 Partners’ other airlines.
Bonza’s fleet of four Boeing 737 Max-8s has been struggling to service its route map and cater to pilot training requirements. This has resulted in many frustrated customers experiencing last-minute cancellations or delays, while aspiring pilots are unable to complete their training as scheduled.
Multiple senior executives have left the business over the past six months, including former chief commercial officer Carly Povey and 777s ex-head of airline investments, Manish Raniga.
The company was the first high-capacity, low-cost carrier to launch in Australia since now-defunct Virgin subsidiary Tigerair took off 15 years ago. It has positioned itself as a leisure carrier targeting tourism destinations in regional Australia, rather than competing with Qantas or Virgin, which service high-frequency routes.
Although it is a model that has worked well across Europe and Asia, critics have expressed concern Bonza’s structure is unsustainable due to Australia’s size and small population.
Source: The Age
