Vanuatu’s Supreme Court has decided a restructuring plan submitted by Air Vanuatu’s liquidators can proceed, a move which will see the embattled airline resurrected from the financial graveyard.
Under the Deed of Compromise, control of Air Vanuatu will return to management after all shares from the business are transferred to AV3 Ltd, an entity wholly owned by the Vanuatu Government, which in turn clears up to AUD$110 million in debt.
Once transferred, the airline will return to public hands, nullifying the liquidation imposed in May.
Administrator Ernst & Young (EY) Australia said the execution of the deed was a positive outcome for the airline and its creditors.
“We’re very pleased the Supreme Court of Vanuatu ratified the Deed of Compromise,” said EY Partner in Strategy & Transactions, Morgan Kelly.
“The implementation of the Deed of Compromise maximises the return to creditors and presents an opportunity for the Air Vanuatu business to continue, saving jobs and providing vital aviation services for Vanuatu.”
The Deed of Compromise terms also include a restructured workforce and recapitalisation for the airline under its new government vehicle.
No date has been set for Air Vanuatu to return to the sky post-administration, however a very limited schedule of services to Tanna and Espiritu Santo resumed in Aug.
The carrier will resume initially with domestic services but says it may consider international routes in the future.
In terms of international flying, numerous airlines have stepped in to fill the void, with Qantas, Virgin Australia, Jetstar and Solomon Airlines either launching, expanding or preparing to launch services from Australia’s east coast to Port Vila.
Prior to its collapse, Air Vanuatu flew to Brisbane, Sydney and Melbourne using a leased Boeing 737-800 jet, which was repossessed once the carrier entered administration, while a domestic network flown by turboprop aircraft was also operated.
