Boeing jet abandoned at Melbourne Airport as airline owes millions

Exclusive pictures obtained by news.com.au show a Boeing plane abandoned at Melbourne Airport where it is believed to have been grounded for months.

A Boeing jet has been abandoned in Melbourne amid the collapse of Vanuatu Air.

Exclusive pictures obtained by news.com.au show the 2016 Boeing 737-800 – registration YJ-AV8 – sitting at the Melbourne Jet Base at Melbourne Airport on Thursday, where it is believed to have been grounded for months.

A liquidators’ statutory report to creditors of the company, seen by news.com.au on Thursday afternoon, confirmed the aircraft, which had been leased, was repossessed because the airline could not pay its debts.

The rest of the company’s fleet – another five aircraft – are in Port Vila, where the airline is based in Vanuatu. Three require maintenance and two have a “flight ready” status.

The government-owned airline was placed into voluntary liquidation, with liquidators from Ernest & Young Australia taking control of the business on Friday, May 10.

An Air Vanuatu plane sits grounded at the Melbourne Jet Base at Melbourne Airport. Picture: Media Mode/news.com.au

Flights were unexpectedly cancelled to and from Sydney, Brisbane and Auckland last week as the airline grounded all its flights.

There were in excess of 4000 ticket holders with unused flights at the date of the liquidators’ appointment, according the report. A statement on Thursday said that “a time frame for resumption of Air Vanuatu operations is yet to be confirmed”.

The airline employed 441 staff across Vanuatu, Australia and New Zealand, which liquidators considered high number for an operation of the airline’s size and nature.

It was the second airline to collapse within a fortnight, following Australian airline Bonza, which was operating less than 18 months after launching its first flights.

According to local newspaper Vanuatu Daily Post, the nation’s Prime Minister Charlot Salwai confirmed this week its Boeing 737-800 had been repossessed because the Vanuatu Government failed to meet almost $6.8 million (541m Vanuatu Vatu) in lease payments.

Additionally, it reported there were maintenance costs that Air Vanuatu could not afford.

The liquidators did not comment on this to news.com.au but their statutory report to creditors said the company was in “significant financial distress” and that its financial records were in a “poor state” and out of date.

“Before our appointment, the company’s poor financial position had meant aircraft had been repossessed and it was unable to pay its debts,” the report said.

“It was clearly not in a position to meet its financial commitments from its own resources.”

The plane has been abandoned. Picture: Media Mode/news.com.au

Flight tracking websites show it hasn’t left Melbourne Airport since January. Picture: Media Mode/news.com.au

It said Air Vanuatu was “unable to meet the costs of parts critical to the fleet’s operation,” which resulted in aircraft being grounded for extended periods of time, and that it encountered issues, “such as defaulting under supplier arrangements and the company’s insurance policies”.

The Boeing 737-800 aircraft has been grounded at Melbourne Airport since January, according to online flight tracking data.

news.com.au has contacted the American company it understands owns the aircraft for comment.

The liquidators’ report said Air Vanuatu entered into codeshare arrangements with various alternative airline carriers when its Boeing 737 was out of action for maintenance.

It said a $US338,027 (about $A505,770) deposit held by these carriers “will likely be claimed by these parties due to the company’s insolvency”.

It is estimated in total at this stage Air Vanuatu owes secured creditors $US10,656,165 (about $15.9m) and unsecured creditors $US26,626,609 (about $39.8 million).

Air Vanuatu said in March it was waiting for parts for the aircraft. Picture: Media Mode/news.com.au

Air Vanuatu said in a statement in March, obtained by industry website Australian Aviation, that it was operating in a “challenging environment” and cited global parts shortages.

“ … with the airline’s sole Boeing 737 aircraft still awaiting parts and one of the contracted Solomon Airlines A320s now also requiring engineering works,” the statement read.

“Air Vanuatu management confirm the airline is focusing on two major priorities: first, sourcing the required parts from as far afield as Europe, Asia and America to ensure the return of their aircraft to service, and secondly, continuing to operate their schedule with international flights operated mostly by partner aircraft and maintaining domestic schedules with their fleet.

“Globally there are many airlines affected by parts shortages and this is a major concern for the industry.”

The aircraft, which was leased, has been repossessed because Air Vanuatu didn’t pay its debts. Picture: Media Mode/news.com.au

The liquidators said aviation safety experts were undertaking safety and airworthiness checks of Air Vanuatu’s fleet, focusing first on the domestic aircraft that are said to be flight ready.

They said they were conscious that the grounding of these aircraft was significantly disruptive to travel in Vanuatu.

The liquidators stated their intention was for the airline to operate while options for the business’ future are explored, if they can secure adequate funding and maintain key stakeholder support.

“Potential going concern outcomes include a recapitalisation of the current business, or the sale of the company’s business and assets,” they said.

“In the absence of funding, or if the liquidators are unable to secure the support of all the company’s key stakeholders to maintain the business, the liquidators will have no other choice but to close the business and wind up the company.”

The company is in “significant financial distress” and its financial records were in a “poor state”. Picture: Media Mode/news.com.au

Virgin Australia told news.com.au on Friday it would fly an additional two flights per week from Brisbane to Port Vila.

“We can confirm that at the request of the Australian Government to lift capacity, Virgin Australia will increase the number of services between Brisbane and Vanuatu by two flights per week to five per week for the remainder of May and June,” it said.

The airline will operate five regular flights per week on Monday, Wednesday, Friday, Saturday and Sunday.

Qantas, which does not operate flights into Vanuatu but has a codeshare partnership with Air Vanuatu, said it was supporting codeshare customers who were impacted.

Qantas customers who are booked on an Air Vanuatu flight between now and May 31 are instructed to call Qantas or their travel agent to discuss options including refunds or a flight credit.