Air Vanuatu Faces Liquidation as Lessor Repossesses Sole Jet Amid Financial Crisis
Air Vanuatu, the state-owned flag carrier of Vanuatu, has had its only jet, a B737-800, repossessed by Air Lease Corporation due to unpaid lease debts amounting to VUV541 million (USD 4.5 million). This financial setback is a critical factor that led the Vanuatu government to suspend the airline’s operations and appoint liquidators earlier this month. The jet, registered as YJ-AV8 (msn 42052), was moved to Melbourne Tullamarine for maintenance in January and has been there since.
The first creditor’s report released on May 16, 2024, paints a grim picture of the airline’s finances, showing a deficit of USD 73,505,247. The report outlines a dire financial situation, with the airline unable to fund operations or meet its financial obligations. “The company’s financial position is dire, and it clearly cannot fund its own operations,” the report stated, underscoring the challenges faced by Air Vanuatu including the inability to afford critical parts and defaulting on supplier and insurance arrangements.
Ernst & Young, overseeing the liquidation, provided preliminary figures indicating significant debts across various categories. These include USD 10,656,165 to secured creditors, USD 12,210,147 in non-financier loans, and over USD 21 million in government loan debts, among other liabilities. The report also highlighted that some of the airline’s other assets, including its ATR72 and three DHC-6-300 aircraft, are grounded due to maintenance and seizure issues.
The financial difficulties have prompted responses from other regional carriers. Virgin Australia is increasing its flights from Brisbane, Fiji Airways has upgraded its aircraft to accommodate more passengers, and Solomon Airlines has started operating a weekly service between Port Vila and Auckland. These adjustments aim to fill the gap left by Air Vanuatu’s suspended operations, which had played a vital role in connecting Vanuatu with major neighboring countries like New Zealand and Australia.
Amidst these operational adjustments, the Vanuatu government has expressed intentions to possibly restart the airline with private sector involvement, though recent budget constraints and loan obligations from China’s Belt and Road initiatives have limited governmental support to the airline.
The situation remains fluid, with potential interest from other airlines like Fiji Airways in acquiring Air Vanuatu, and Nauru Airline reportedly considering some of the airline’s assets. The first creditor’s meeting, scheduled for May 22, 2024, will likely provide more clarity on the future of Air Vanuatu and its remaining assets.