Grounded carrier Air Vanuatu eyes potential investors to fund revival  

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The liquidators acting on behalf of grounded South Pacific carrier Air Vanuatu have announced that several entities have expressed an interest in taking over the carrier. Air Vanuatu grounded its fleet and canceled all future flights on May 9, 2024, appointing consultancy firm EY as its liquidators.  

The airline’s suspension of services left thousands of tourists from Australia and New Zealand to the South Pacific island stranded and needing to seek alternative travel arrangements from other airlines in the region.    

“We have received interest from a range of parties seeking to resume Air Vanuatu’s operations,” says Morgan Kelly, Partner in Strategy & Transactions at EY. “We’re reviewing these offers and will be working toward a resolution as soon as possible.” 

These latest comments from EY follow a previous statement made on May 31, 2024, in which the firm said the airline needed to be restructured and its operations reassessed to reduce operating costs. EY said that the restructuring could potentially impact 170 roles at the carrier.  

At the time of the grounding, the airline had employed 441 people, which EY has said “was a high number of staff for an operation of the company’s size and nature”. It also said there were more than 4,000 ticketholders with unused flight tickets. 


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According to Kelly, EY is not currently able to disclose the number and nature of non-binding offers it has received for Air Vanuatu. He added that until a full evaluation of the offers has been completed, a date for the resumption of Air Vanuatu’s services cannot be determined. The offers will be assessed as “part of a structured sale or recapitalization process to ensure the best outcome for creditors,” Kelly added. 

According to EY documents, the carrier’s assets include airport slots in Brisbane, Melbourne, Sydney, Auckland, New Caledonia, and Fiji. Additionally, on the date of grounding, the carrier’s fleet consisted of a single Boeing 737 MAX 8, an ATR72-600, plus two De Havilland DHC-6 Twin Otters. The 737 is currently parked at Melbourne Airport (MEL) in Australia, while the ATR72 and Twin Otters are stored in Port Vila, Vanuatu.  

Any future shareholder in Air Vanuatu is likely to face challenges from the outset should the airline manage to be revived, however. Since it ceased flying, other carriers have swarmed onto its key routes to offer a continuation of services between key cities in Australia and New Zealand and the idyllic island nation. 

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Qantas, Jetstar, and Virgin Australia have both increased their services from Australia while Solomons Airlines now flies twice a week to Port Vila from New Zealand using Airbus A320s. 

Air Vanuatu ceased flying with debts of more than AU$110 million ($73 million) and had its only jet aircraft (the 737-800) repossessed by the lessor. With the company accounts showing just AUD$11 million ($7.3 million) in assets, and with the increased competition now installed on its lifeline routes, it is hard to envisage how such an airline for such a small nation can realistically ensure ongoing profitable operations.  

Any future investor will need to have a robust financial plan in place to ensure that any potential Air Vanuatu Mk2 will prove to be more profitable and cost-conscious than its predecessor.  

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