Bonza is in administration after its fleet was grounded. So what’s next?

Bonza announced on Tuesday afternoon that it was going into voluntary administration. What’s next for the embattled budget airline?

Bonza chief executive Tim Jordan.

Bonza announced on Tuesday morning that it had grounded flights across the country, ahead of discussions about the ongoing viability of the business. The company is now in voluntary administration with the fleet grounded at least until Thursday. Here’s what you need to know.

Why are all Bonza flights grounded?

Bonza’s fleet of five Boeing 737 MAX 8s was repossessed by leasing company AIP capital early on Tuesday morning, forcing the company to suspend all flights.

The company released a statement later that morning saying it had “temporarily suspended services due to be operated today (Tuesday 30th April), as discussions are currently underway regarding the ongoing viability of the business’’.

Bonza Aviation was placed in voluntary administration later that day, with Hall Chadwick appointed to assess the financial state of the company and look at whether it can return to doing business, be sold, or whether it should be shut down.

Bonza only started flying in Australia in January last year, when it commenced flights from the Sunshine Coast. It has since grown its network to 34 regional routes.

The first signs of trouble emerged within six months when several routes were axed and flight bookings put on hold. Bonza rallied only to again run into problems in December.

Issues with aircraft deliveries and regulatory approvals saw dozens of flights cancelled over the Christmas holidays, creating discontent among customers.

Who should customers call for help?

The administrators have established a hotline for customers for any queries which is 03 8678 1600.

The federal government has established a hotline for stranded passengers which is 1800 069 244.

Customers can also email [e-mail]

What can stranded Bonza passengers do about their flights?

Virgin Australia and Jetstar are both offering “complimentary seats” to Bonza ticket holders on flights to the airport nearest their destination.

Why is Bonza in voluntary administration?

Voluntary administration is a process which involves the directors of a company handing over responsibility for its management to an accountancy firm which specialises in business recovery, in this case Hall Chadwick.

This happens most often when a company is struggling to pay its debts and there might be concerns around its solvency.

The administrators will rapidly assess the financial state of the business and make a decision on whether it can continue to operate.

This process involves discussions with creditors the company owes money to, staff, and in the case of a business such as an airline, federal regulators.

The possible outcomes include the company being sold, continuing to run under a deed of company arrangement - an agreement with creditors to only partially pay back their debts - or liquidation, which involves shutting the business down and selling its assets.

When will Bonza services resume?

The Bonza fleet is currently grounded “up to and including Thursday May 2’’. the administrators have said.

“Customers with bookings during this period are advised not to travel to the airport,’’ they said.

There is no certainty Bonza services will resume at all.

What’s next for the airline?

The administrators, Hall Chadwick, said in a statement that the fleet would remain grounded “up to and including Thursday, May 2, “and customers with bookings during this period are advised not to 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,’’ Hall Chadwick said in a statement.

“The company’s fleet is currently grounded pending discussions with relevant parties and key

stakeholders.

“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.

“The administrators are conscious of the impact of the grounding of the company’s fleet and are working alongside the existing senior management of the company and the aircraft operational team in respect to ongoing trading.’’

The administrators said they would provide regular updates to all stakeholders “across

multiple platforms so that all affected parties have access to up to date information’’.

What’s next for Bonza staff?

Qantas is offering Bonza crew members the chance to discuss job opportunities within Jetstar and Qantas and has set up a dedicated recruitment page for Bonza crew on the Jetstar careers website.

At least 180 cabin crew are employed by Bonza and dozens of pilots, in a workforce of around 300 people in total.

In a statement, Qantas said it was a difficult time for both Bonza customers and their team members, and extended their thoughts to all concerned.

“If Bonza employees would like to discuss recruitment opportunities within Jetstar and Qantas, particularly in specialised fields which are unique to aviation, we’ve set up a dedicated page on the Jetstar careers website,” said the statement.

What did Bonza CEO Tim Jordan say?

A 3am email from Mr Jordan to staff on Tuesday was the first sign of trouble this week.

An anonymous staff member, who spoke with news.com.au, shared the content of Mr Jordan’s email, which revealed that “all aircraft have had repossession proceedings commenced by AIP the aircraft lessor”.

“This was a surprise to both ourselves and 777 partners,” the note Mr Jordan read.

“We are currently assessing all options and will provide an update just as soon as we have more information available to share.

“As a consequence of this all first wave flights from all bases have been cancelled.”

Later on Tuesday, just after 8am, by which time angry customers had found that their flights were grounded, Mr Jordan apologised and said they were working as quickly as possible to determine a way forward.

“Bonza has temporarily suspended services due to be operated today (Tuesday April 30) as discussions are underway regarding the ongoing viability of the business,” Mr Jordan said.

“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.”.

Who owns Bonza airlines?

Bonza Aviation is majority owned by Florida-based private investment firm 777 Partners.

As well as aviation interests, 777 has invested in the British Basketball League, several sports clubs around the world including soccer clubs in Spain and the Melbourne Victory soccer club in Australia.

It also offered to buy Liverpool-based Premier League club Everton last year and has loaned the club hundreds of millions of dollars.

777 Partners touts itself as providing “cutting edge digital, data science and marketing methods that unlock trapped value and enables extraordinary growth’’.

Bonza chief executive Tim Jordan. Picture: News Corp Australia

Who owns 777 Partners?

The firm was started in 2015 by Josh Wander and former Deutsche Bank executive Steve Pasko. It is reportedly backed by Bermuda-based reinsurer 777 Re.

What other airlines does Bonza’s parent company own?

777 Partners also owns a stake in Flair Airlines in Canada which ran into trouble late last year when four of its planes were repossessed over alleged missed leasing payments. A $US30m lawsuit was filed against 777 in January this year, according to reports.

Bonza had an irreverent take on aviation and flew routes neglected by the larger carriers.

Where is Bonza based?

Bonza began flights out of its hub on the Sunshine Coast in late January last year, after finally receiving the green light from the Civil Aviation Safety Authority to operate.

It quickly expanded to Melbourne and the Gold Coast operating 34 routes in total but ran into trouble when new aircraft did not arrive as soon as expected, resulting in poor reliability.

Frequent cancellations left passengers stranded and forced to shell out for flights on other airlines, leading to growing discontent among travellers.

What other Australian airlines have failed in recent times?

•Ansett, once Australia’s largest domestic carrier, went into administration in 2001, after competition from low cost carrier Virgin Blue and a series of poor business decisions crippled the company. At its peak the airline, founded by Reg Ansett in 1935, operated more than 100 aircraft.

•Compass Airlines kicked off operations in 1990 after the federal government deregulated the airline industry, doing away with the former two airline policy. Qantas and Ansett competed aggressively with Compass on price on the major routes, and the company’s planes were grounded by December 1991. The company was relaunched not long after but again fell into administration.

•Singapore-based Tigerair Australia began flying locally in 2007, and was offering ultra-cheap flights several times per day on major routes such as Sydney-Melbourne. Virgin Australia took control of the company in 2014, operating it as its low-cost arm, however Tigerair was shuttered in 2020 due to the impact of the pandemic.

•OzJet Airlines was founded in 2005 and had closed by 2012. The Tullamarine-based operator offered a business class-only service at competitive rates to economy seats on other carriers. By late 2005 the company started offering chartered services and by March the next year it stopped running scheduled flights, although these later recommenced. OzJet was placed in administration in 2009 and in 2012 the company which bought it, Strategic Airlines, also failed.

•Virgin Australia went into administration in early 2020, struggling with a large debt load and the impacts of pandemic lockdowns. The company had asked for a bailout from the federal government but this was rejected. The company emerged from administration in November 2020, with the backing of private equity firm Bain Capital, which was considering options for the business including a relisting on the ASX sometime this year. That is now on hold indefinitely with a trade sale a possibility.

Originally published as Bonza is in administration after its fleet was grounded. So what’s next?