By Amelia McGuire and Sarah Danckert
Bonza has entered voluntary administration after the company that owns its aircraft lessor tried to repossess its planes, leaving hundreds of travellers stranded across the country on Tuesday.
Passengers wanting 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.
Bonza boss Tim Jordan apologised to customers and said he was considering the viability of the business.Credit: Alex Ellinghausen
The company has appointed Hall Chadwick as voluntary administrators for Bonza’s operating and holding company, Australian Securities and Investments Commission disclosures say. Norton Rose Fulbright has also been engaged.
A joint release issued by Hall Chadwick and Bonza late on Tuesday confirmed Bonza’s fleet had been grounded until the end of Thursday and advised travellers with flights booked up until Friday morning to not travel to the airport.
“The voluntary administrators with the engagement of Norton Rose Fulbright are currently considering the continued trading of the company’s operations during the course of the administration period including the continuation of employment of all employees of the company,” the release said.
“The discussions regarding ongoing trading are occurring over the forthcoming days and the administrators will be in a position to update all stakeholders as the matter progresses.”
Bonza’s board convened an emergency meeting on Tuesday afternoon to discuss potential options for the struggling carrier. It’s not yet clear whether Bonza’s remaining flights will run as scheduled and thousands of passengers are awaiting further information regarding travel booked after Thursday.
Chief executive Tim Jordan apologised to customers in a statement and said he was considering the viability of the business, but he did not confirm or deny whether any of its aircraft had been repossessed.
Bonza’s 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 said. 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 offered to support passengers on complimentary flights to the airport closest to their final planned Bonza destination. Most 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.
Federal Transport Minister Catherine King said the government had limited information about the outlook for Bonza. She encouraged all affected passengers to call a government hotline for support. The number for the hotline is 1800 069 244.
“We have made it very clear to Bonza that our expectations are that they inform passengers about what their options are, what changes are being made, and that they respect their consumer rights, of which they do have some.
“We are a small market, and it is always very difficult for new entrants. We’ve seen that through the process of aviation history here in Australia, but we are determined as a government to make everything we can do to try and improve competition,” she said.
The national secretary of the Transport Workers Union, Michael Kaine, said he was concerned for the roles of the 150 employees at Bonza.
“Whether it’s a terrorist, epidemic, or a company that’s become commercially unviable there will be crisis ideation. Other countries around the world take equity in the airlines. If we’re not politically willing to do that we have to find how the community gets its voice,” he said.
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.
All flights operated by budget carrier Bonza were cancelled.Credit: Jason South
Over the past year, Bonza has been hamstrung by fleet issues. Many of the purple planes scheduled to be used by the airline have instead been 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 have been 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 777’s 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.
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