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Air Vanuatu was at least US$66 million (around $99 million) in the red when it went into voluntary liquidation last week, liquidator Ernst & Young have revealed.
The Vanuatuan national carrier, which cancelled flights last Thursday leaving passengers stranded, appears to have US$7,623,209 in “non-current assets”, including aircraft, property, plant and equipment, and $73,505,247 in liabilities, for a total deficit of US$65,882,038, says Ernst & Young.
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While the creditors’ report lists $24,438,044 in current assets, including cash on hand and inventory, these have not been factored into the calculations as Air Vanuatu’s available financial information is “significantly out of date,” according to the liquidators.
“Therefore, this statement represents the liquidators’ best estimates only, based on the company’s books and records, and the information available,” they said.
“As our investigations continue, it is almost certain this estimate will change. In particular, it is likely the value of liabilities will increase materially.”
The airline is estimated to have held a little over US$800,000 in cash and cash equivalents, though the liquidators have noted that a $20 million deposit made to Airbus on an A220 that Air Vanuatu later cancelled has yet to be refunded and could be considered an asset.
In the report, Ernst and Young reaffirmed its commitment to “attempt to continue to trade the operations of the Company whilst going concern options for the Company’s business can be explored”, provided it can secure funding and maintain support from key stakeholders.
“Potential going concern outcomes include a recapitalisation of the current business, or the sale of the Company’s business and assets,” the liquidator wrote.
“At this stage, the liquidators are still in the process of stabilising the company’s operations and completing their preliminary assessment of the company’s financial and operational position. Given the degree of the company’s financial distress, however, the Liquidators are simultaneously also engaging with potential recapitalisation partners and other interested parties to explore future solutions.
“Trading the operations in liquidation to implement a going concern outcome is estimated to be a highly costly strategy. Therefore, it will only be pursued in the event it is commercially appropriate to do so.
“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.”
Air Vanuatu is a codeshare partner of Qantas.
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says:An interesting scenario,- clearly the enterprise has financial handling problems and in a theoretical sense it would appear that there is little alternative but closure however in the regions current geopolitical arena it just doesn’t make sense to go down that path. There are many operational options that would achieve a positive rebirth of the airline which would benefit both the country and the regions. Closure would make life for Oz most difficult, think about it!