The administrators appointed to take control of the affairs of grounded Australian low-cost carrier Bonza have been given additional time in which to seek a buyer for what remains of the airline. Hall Chadwick, Bonza’s administrators will have until the end of July 2024 to save the budget airline after successfully arguing for an extension of their appointment in an Australian Federal Court on May 27, 2024.
During the Federal Court hearing, Hall Chadwick argued that around 300 former Bonza employees remain in a “period of uncertainty” as a result of being stood down following the airline’s sudden cancellation of all flights on April 30, 2024.
However, without having been formally released from their employment by the administrators pending a potential buyer for the airline being found, these employees remain without pay but cannot claim state benefits until the company is either wound up or sold, which remains the administrators’ preferred option.
The barrister acting on behalf of Hall Chadwick, James Hutton, advised Justice Ian Jackman residing that the airline’s most valuable remaining asset was its Air Operator’s Certificate (AOC), which is likely to be canceled by the Australian aviation authorities if Bonza is liquidated.
“Given the nature of the uplift that can be expected if the business is sold as a going concern and the value of the AOC can be realized, Your Honour could reasonably anticipate that extension of the administration or the convening period to enable an extension of the administration has the very real prospect of significantly improving the position of creditors, including employee creditors,” said Hutton.
“[Employees] have the possibility of receiving a greater recovery than they would receive under the Fair Entitlements Guarantee [state benefits scheme], and that possibility is enhanced if the competing period is extended, and secondly, they have the possibility of continuing employment with Bonza, which is not a possibility that will be open if the company goes into liquidation,” Hutton added.
Justice Jackman accepted Hall Chadwick’s arguments for a further period of administration and granted a two-month extension to the firm’s appointment, from May 29, 2024, until July 29, 2024.
“I accept that the extension of the convening period sought is in the best interest of the creditors of the company and the extensions sought should be granted,” Judge Jackman said in his decision.
“The sale process which the administrators are currently undertaking offers the best prospect of a substantial return to creditors. The administrator’s view is that a sale of the business and execution of a [Deed of Company Arrangement] is likely to result in a better outcome for creditors than immediate liquidation.
“If the convening period is not extended, the administrators would likely have no option but to recommend to creditors that Bonza would be wound up.”
Bonza’s fate remains uncertain
Bonza has been grounded since its aircraft were repossessed by lessors at the end of April 2024, over concerns regarding the financial state of Bonza’s parent company and primary investor, Miami-based 777 Partners. The carrier immediately entered a voluntary administration arrangement the same day, handing over the affairs of the company to Hall Chadwick. Several of Bonza’s aircraft have since left Australia and are being temporarily stored in the US pending onward lease to new carriers.
Hall Chadwick revealed earlier in May 2024 that the firm was engaged in talks with around 20 interested parties about taking on the Bonza brand. This group of potential investors was said to include airlines and other travel companies with six being described as “very interested”. However, since then, one such potential suitor, Vietnam-based low-cost carrier, Vietjet, has stated it is no longer interested in the failed airline.
At an initial creditors meeting held in Sydney in early May 2024, Hall Chadwick provided some insight into the sheer scale of debts accumulated by Bonza since it started flying in 2023. The total rounded out at over AUD 116 million ($77.2m), including AUD 4.6m ($3.1m) owed to aircraft lessors, AUD 76m ($50.6) owed to two undisclosed creditors, AUD 10m ($6.7m) owed to ten landlords, AUD 15m ($10m) owed to trade creditors and around AUD 5m ($3.3m) owed to 324 employees.
Meanwhile, an online campaign, “Bring Bonza Back” is being waged by various supporters and stakeholders of the business in an attempt to keep awareness of the carrier alive while the administrators seek the investment required to revive the grounded carrier.