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The Guardian - AU
The Guardian - AU
Business
Elias Visontay Transport and urban affairs reporter

Bonza administrators in global talks on grounded budget carrier that helped ‘push down air fares’

A Bonza 737 Max 8 aircraft at Melbourne airport
Bonza’s fleet of Boeing 737 Max 8 planes remain parked at airports across Australia after the budget airline entered voluntary administration. Photograph: Joel Carrett/AAP

The administrators determining Bonza’s future have held round-the-clock talks, including with international aviation figures and the owner of the airline’s aircraft, as Australia’s airports maintain the budget carrier was “instrumental in improving competition and pushing down air fares”.

Administrators had meetings scheduled late on Wednesday evening and into Thursday morning with “key industry participants” in Australia and overseas, their second day working to such a schedule. They also had an “open dialogue with the lessor of the company’s fleet” of Boeing 737 Max 8 planes that remain parked at airports across the country.

The five repossessed planes have been grounded until at least Friday, but it is unclear if they will ever take flight again commercially in Australia. Industry sources expect them to be flown back to the US for other lease deals.

The administrators also met with Bonza’s chief financial officer, Lidia Valenzuela, “to go through the financial position of the Company with a view to updating creditors of that position in due course”.

With the airline’s future in limbo, some industry insiders said that Bonza’s low-cost business model was sustainable but it had been hindered by its financing and lease arrangements.

Were Bonza services to run as scheduled over the next week, the airline would have conducted 183 flights carrying as many 33,106 passengers, data compiled by the Australian Airports Association (AAA) showed, suggesting a growing customer base and business model that was helping dent Australia’s tight airline duopoly.

Online forums featuring Bonza passengers unable to contact the airline have been flooded with stories of customers contesting the charges for their bookings with their banks as the only way to pursue refunds.

While the airline’s model was to fly low-frequency, budget services to at least one regional destination on routes not currently serviced by other airlines, it did compete with Qantas, Virgin and Jetstar on some.

With Bonza’s entrance, there were four major airline groups competing on a single domestic route for the first time in Australian aviation, between the Gold Coast and Melbourne.

“On routes where Bonza has been competing with other airlines such as Melbourne-Gold Coast, the data is clear – Bonza has been instrumental in improving competition and pushing down air fares,” James Goodwin, the chief executive of the AAA, said.

Goodwin also rubbished claims airport charges had led to Bonza’s financial troubles, pointing to competition watchdog data that airport fees make up an average 4.8% of an air fare.

As administrators continued considering the airline’s future on Wednesday, the airline’s five remaining Boeing 737-8 Max aircraft in Australia sat on tarmacs; two each at its Melbourne Tullamarine and Sunshine Coast airport bases and one at Gold Coast airport.

Engineering administrators boarded the aircraft on Tuesday, Guardian Australia understands, to remove the flight manuals from the aircraft – something the planes could not legally be flown without.

The aircraft now sit parked away from terminals and gates, secured with concrete blocks, and are expected to be taken back to the US.

Industry sources say this likely fate for the aircraft make the prospect of Bonza being bought and surviving the administration process slim, as the main value in the airline remains its air operator’s certificate.

Without aircraft, reviving the airline would be costly, as the availability of Boeing 737 Max 8s that its pilots are trained on has become more scarce due to a slowdown in production at Boeing.

Bonza’s management, who were blindsided by the repossessions on Tuesday morning, are understood to be eager to find a new buyer and have the airline resume operations at some point. “I cannot say much at this stage but suffice to say we are fighting this,” the chief operating officer, Michael Young, said in an internal message.

The federal transport minister, Catherine King, said she had been talking with the administrators and “they’re trying to get the airline back up and running”. “I think they’ve got to look at the books a fair bit. It’s unlikely that will happen,” King said.

The airline’s US owners, 777 Partners, has yet to comment on the aircraft repossessions. The private equity firm has been attempting to take over English Premier League football club Everton, loaning the club more than £200m over seven months as it tries to convince the Premier League it has the funds to complete a proposed takeover of the Toffees.

Following news of Bonza entering administration, the Guardian revealed that Everton called in a leading firm of restructuring and insolvency advisers, raising further questions about 777 Partners’ takeover.

Do you know more? Contact elias.visontay@theguardian.com

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