Air Vanuatu Faces Financial Struggles, Receivers Appointed
Passengers were left stranded as the liquidation of the Vanuatu flag carrier took immediate effect. Despite this, EY remains optimistic that the airline can bounce back to profitability.
The Vanuatu government decided to place its flagship air carrier into liquidation due to a “challenging period.”
Amidst this decision, flights were halted immediately, leaving many passengers from Australasia stranded away from their homes.
Ernst & Young (EY) confirmed in a statement that they had been appointed as voluntary liquidators for the airline, which employs 362 individuals. This move was a response to the tough conditions faced by the global aviation industry, including labor shortages, increased input costs due to inflation, and rising credit expenses.
The statement mentioned that Air Vanuatu had been significantly impacted by the disruption of tourism caused by cyclones.
The abrupt cessation of services has left numerous travelers stranded, but EY has assured that return flights will be arranged soon. They stated, “Affected travelers will be notified of the disruption and re-booked on flights once operations resume.”
Moreover, besides the general downturn in the airline sector, Air Vanuatu’s financial struggles were exacerbated by mechanical issues with its sole 737 aircraft, crucial for connections between the islands and Australia/New Zealand.
In September 2023, 20 international flights had to be canceled or rescheduled after airplanes were grounded in Brisbane awaiting a mechanical part for repairs.
Hopes of Flights Restarting
Vanuatu’s Finance Minister, John Salong, provided assurances that operations would soon return to normalcy under administration. He emphasized the critical role Air Vanuatu plays in the lives of the people and its strategic significance.
He explained, “The first priority is to reassure employees that it’s business as usual so they can take care of stranded customers and manage existing bookings.”
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Currently, we are collaborating with our partner and codeshare airlines, along with other operators and Vanuatu government agencies to find a prompt solution,” stated Mr. Kelly.
Outlook
EY conveyed that the future prospects for the airline were positive. They intend to resume operations swiftly while exploring opportunities to strengthen the carrier’s position.
The initial creditors’ meeting will be held soon, and the current management team will remain in place. Travel advisories for affected passport holders have been issued by the ministries of foreign affairs in New Zealand and Australia.
Background
Established in 1981, Air Vanuatu has evolved into a key player in the regional aviation industry, operating both domestic and international routes connecting Australia, New Zealand, Fiji, and New Caledonia.
The national carrier plays a vital role in linking Vanuatu’s 83 islands, many of which are isolated and thinly inhabited, ensuring access to essential services like healthcare, education, trade, and tourism.
Air Vanuatu maintains a contemporary fleet comprising a Boeing 737 for international flights and ATR 72s for domestic services.
