Collapsed airline owes more than $110 million, liquidators say

Bankrupt airline Air Vanuatu owes creditors $110 million and that number is expected to rise, the company’s liquidators say.

In a mandatory report to creditors published this afternoon, liquidators Enrst and Young said the carrier’s “financial condition is dire”.

Air Vanuatu has a total deficit of US$65.9 million (S$98.6 million) and owes creditors US$73.5 million (S$110 million), according to the report, which says the actual amount owed is likely to be much higher.

“The company’s available financial information is significantly out of date,” the liquidators wrote.

“Accordingly, this statement represents only the liquidators’ best estimates based on the company’s books and records and available information.

“As our investigations continue, it is almost certain that this assessment will change.”

“In particular, the value of liabilities is likely to increase significantly.”

Liquidators are exploring options – including a sale of the business – to keep Air Vanuatu running, but said that if not for financial support from the Vanuatu government, the airline would have gone bankrupt forever.

“The liquidators are grateful for the government’s announcement of the financial support that is needed to stabilize the company’s operations.

“If it were not for this financial support, the liquidators would have no choice but to cease their activities and close the company.

“The company’s financial condition is dire and it clearly cannot finance its own operations.”

According to the report, only two of Air Vanuatu’s six aircraft are currently ready for flight, with three requiring maintenance and one returned by its owner.

The liquidators said a shortage of aircraft parts was one of the reasons for the airline’s financial problems.

“(Air Vanuatu) has faced several operational challenges in recent years…such as travel restrictions related to the COVID-19 pandemic, natural disasters such as the 2023 twin cyclone and disruptions to its fleet availability due to global shortages aviation parts,” the report states.

“As a result, we understand that the business has not performed well for a significant period of time.”