Administrators determining the future of the troubled airline Bonza are bracing for as many as 20,000 out-of-pocket customers to join a creditors meeting this week with the federal court hearing that online voting options are being considered.
On Tuesday lawyers representing Hall Chadwick, the administrators controlling Bonza after its planes were abruptly repossessed a week ago, appeared before the federal court justice Elizabeth Cheeseman seeking orders to streamline the process for the first creditors meeting on Friday. It will be held amid ongoing efforts to find a new owner for the budget carrier.
Cheeseman, sitting in Sydney, heard that 57,933 customers who had future bookings with the airline for flights that had not yet been cancelled – and for which refunds were not available – would be considered contingent creditors for the administration process, along with 120 trade creditors and 323 employees.
James Hutton SC, one of the barristers representing the administrators, told Cheeseman there were “serious practical difficulties” preparing for the first meeting scheduled for Friday in Sydney. The court heard that there would be the option for creditors to join virtually and appoint proxies.
Hutton said there was a real prospect there could be 20,000 participants. “That would require a stadium,” he said.
“There is [a] high degree of uncertainty” regarding the number of expected participants.
The administrators were examining how to allow online access including a poll to count votes. Creditors and proxies would have to register a day in advance to be verified.
The court also heard Bonza would remain grounded until at least 14 May and employees had been told they would be stood down until then at the earliest.
A key reason for the grounding extension was the status of six leased Boeing 737 Max 8 aircraft that Bonza operated, which are expected to return to North America.
Of the six planes, four had been directly leased to Bonza by an arrangement 49% owned by the airline’s parent company, the US private investment firm 777 Partners. Two other aircraft were leased from another airline part-owned by 777 Partners, Canadian carrier Flair.
But a reported breakdown in the relationship between 777 Partners and its financier, the US insurance giant Advantage Capital Holdings, known as A-Cap, led to a change in ownership structure of the leased aircraft last month.
A new holding company owned by A-Cap, Phoenix Aviation Capital, took full ownership of the aircraft and subsequently issued orders to recall the planes from Australia so they could be leased to more profitable airlines overseas.
Questions about 777 Partners’ financial reliance on A-Cap have led to the Miami-based owner of Bonza being accused of fraud and double-pledging of assets that it didn’t own, according to a lawsuit filed in New York on Friday.
The revelations raised questions about the financial situation of 777 Partners and triggered discussion within Australia’s aviation community as to whether Bonza’s business plan had been sound, and close to a potential takeover from a local business figure, before the abrupt termination of its leases and it entering administration on 30 April.
Five of the repossessed aircraft are located at Melbourne, the Sunshine Coast and Gold Coast airports.
The barrister said the administrators were proceeding on the basis that the aircraft leases had been validly terminated before the administrators were appointed.
“We do not assert that we have possession of them,” Hutton said. “The lessors have clearly expressed their intention to take their aircraft out of Australian airspace.”
Separately on Tuesday, the federal opposition transport spokesperson, Bridget McKenzie, called on the Albanese government to direct financial regulators to immediately investigate 777 Partners, noting their part ownership of the A-League club Melbourne Victory.
“Hundreds of Australian Bonza workers and tens of thousands of Australian customers are out-of-pocket because of the decisions made by this foreign-owned company, not Bonza,” McKenzie said.
She called on the government to offer financial support to Bonza’s staff and aggrieved customers, noting that when Labor was in opposition in 2020 when Virgin Australia entered administration, it had called for government support to save the carrier from collapse.
“Now is the test for Labor – will the prime minister apply the same standards?” McKenzie said.
During a radio interview on Tuesday Anthony Albanese dodged a question asking if the government would bail out Bonza.
On Monday the competition watchdog chair expressed concern about Bonza’s potential collapse.
