Air Vanuatu – What Are We Missing?

PM Charlot Salwai Tabimasmas 1 Share. Minister John Salong, 1 Share.

Vanuatu Government represented by the PM, 1,345,995 shares

Ernst and Young-Administrators/Liquidators.

Vanuatu Government - Majority Creditor (calculated assumption)

Creditors recorded: 662 (assuming that staff and unused tickets are listed as a collective creditor amounting to 1)

What we know so far:

Air Vanuatu as we knew it is gone. We are all aware that something needed to happen to end the nightmare as it has been. Unfortunately, it appears that the shareholders reaction to the problem was not measured, nor was it made with foresight and clarity. It was a knee jerk reaction to a claim against the Airline and the Government from Isleno that had already done the rounds in court both as a Civil and Criminal case. This had gone of for some 15 years. No need to go into details, suffice to say that the case was well and truly won by Isleno. Damages awarded etc… we must remember that this was for whatever reason between some politicians and others that resulted at this impasse.

As so often happens in our country, personalities get bigger than the issues they are dealing with. Conflict is allowed to move at erroneous speed like a wild fire, taking all in its path.

So, what is the issue, as in the real issue here and why are we the people suffering?

Simple terms, back street, petty politics being played out on the big stage to satisfy individual egos whilst using our money, the citizens of Vanuatu’s money, to fund their over embellished self-indulgent egos. That said, maybe we have that wrong, surely, we elected them, we have entrusted them to do the right thing on our behalf!! Surely, they would put the people first and never act in their own self-interests?

What’s next?

So now we know the real reason lets look at the lack of foresight and damage to the country and the people that is the actual cost, plus some for us to examine.

• the shareholders decided to enter Liquidation… to this day we are still not sure if its either a Voluntary Liquidation from the Shareholders asking the Board to do so, or, a creditors liquidation, of which ironically the Vanuatu Government is the single largest creditor, by way of cash injections, guarantees or loans, totaling say around 5.5 billion vatu. A noticeably considerable chunk of the 10.9 billion vatu debt. This doesn’t reflect the money thrown away by the previous Salwai government on the A-220 aircraft that had deposits paid for and no aircraft or re-negotiation to suit the environment.

• offers made to EY to end the liquidation- what we know

We understand several parties lodged interest of which we have been led to understand that approximately 3 are remaining for final acceptance by the Administrator. By end of August.

So what are some of the possible options available for EY to consider?

1.Total liquidation of all assets and the creditors paid by the Administrator, say 3-5 vatu per every 100 vatu of debt owed to the creditors(if they agree).

2.Take the domestic off the international and let the old company do a cents/dollar to satisfy the creditors. This option is more difficult than you can imagine, given that Air Operators Certificates (AOC) are non-transferrable from one entity to another. The usual safety and security issues apply. One can only hope that the CAAV doesn’t compromise itself for those individuals that put pecuniary interests In front of national interests.

3. 100% bailout. Pay all creditors registered in full [subject to being approved] retool the airline, do ground handling and code share, build domestic and then start wet lease for seasonal workers slowly and grow that sector while allowing Qantas, Jet Star and Virgin to grow the international market. (Obviously if supported and approved would be a easy solution, or maybe not given the damage done, but could be done under administration while establishing a new entity and preparing a new AOC for that entity to effectively have a white page)

4. Or, a mix as per the Administrator’s decision based on what’s best for the creditors.

What are our obligations either real, legal or both? We will use the collective “WE” as it is, after all ours not the Governments, just in case they have forgotten.

Legally we could normally walk away and no one can collect as you are protected under the companies act. Unfortunately, when you publicly declare that you are doing it to not pay an individual or company that arouses suspicions and perhaps will unlock some legal doors for the silks to walk through and start lodging claims against both individuals and the government as a whole. This is a very real possibility, particularly if you disenfranchise the wrong people and with 662 registered there is a fair chance 1 or 2 might get annoyed and that will start a class action coming after the Government and shareholders and Directors that’s effectively “US”,

The biggest loser internationally is our reputation, domestically, well we knew about the reputation so it is the lack of service and compromising peoples lives with a lack of clear direction and understanding of the importance of the air line and what it really meant to the country not just a select few that over the years thought it was their private airline.

Who to blame? US of course, its our fault we have not held them accountable we have allowed them to do as they please and feed us nonsense until now they are finally being held accountable. It is up to us to ensure that we do hold them accountable, they are costing us real money, money that can go to improved services for us, that will make our lives better and assist us to grow as a people and a nation.

Finally, should a State, any State be it Vanuatu or other, ignore its obligations and just put themselves into Administration/liquidation and forsake all those that are both loyal and complicit to them, and just let the entire country fall to its knees as one of its most critical infrastructure is reduced to rubble, leaving US with a reputation that is so badly in tatters? How can that possibly be acceptable by US and how can anyone justify this to be a nice way to end the day. Surely WE deserve better? They, our MPs have a duty of care to US and they are not respecting US, they still continue to travel and move about and squabble and fail to see the urgency and importance of this crisis and sit everyone down and fix it. Find a solution, swallow some pride and keep it real.

We deserve better, so now’s the time to give us better.

Anthony Lohane

Surunda, Santo East Coast

news@dailypost.vu

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Air Niugini to Resume Flights to Port Vila, Vanuatu

Port Moresby, July 19, 2024: Air Niugini will restart its weekly service between Port Moresby and Port Vila, Vanuatu, beginning Saturday, 3rd August 2024. The flights will depart Port Moresby every Saturday at 09:45 AM, stopping in Honiara, Solomon Islands, before arriving in Port Vila. Return flights will leave Port Vila on Sundays at 08:30 AM, also stopping in Honiara.

These routes will be operated by Air Niugini’s Boeing 737 aircraft. Gary Seddon, Air Niugini’s Acting CEO, highlighted that the flights would facilitate business connections between Papua New Guinea and Vanuatu, and offer seamless connections to Asia and Cairns via Port Moresby.

Seddon emphasized that this resumption would enhance cultural, sports, governmental, and family ties between the Melanesian countries. Additionally, the flights will provide excellent connectivity between Vanuatu and major destinations like Manila, Hong Kong, and Cairns.

Air Niugini had previously operated this route until 2020, when services were suspended due to the COVID-19 pandemic. The airline also maintains a weekly flight to Fiji and five weekly flights to the Solomon Islands.

Vanuatu Gov't Pays Redundancy for 177 Air Vanuatu Workers: VT219 million

The Vanuatu government has taken decisive action to pay the redundancy fees for 177 workers Air Vanuatu staff who were abruptly laid off on the 31st of May 2024, the sum of over VT219 million.

The 177 workers were supposed to receive their payment on the same day they were laid off, but due to banking processes, the payment did not go through that day. A government official updated that the payments would go through to the workers’ individual accounts yesterday afternoon.

It was stated by a Government official that the Government made this obligation since they are the staffs of Air Vanuatu, they are the citizen of Air Vanuatu, they are the people of Vanuatu.

“We want to look after them, it has to be clear to the citizens of Vanuatu that the Government had a great concern and care, they want that everything was right, but the problem is Air Vanuatu was bleeding over VT100 million a month.

“The payments will go through the bank accounts of the laid-off workers individually as of yesterday afternoon. The payment was made on Friday, the 31st of May 2024, but due to the banking process, there have been some delays,” the Government official stated.

After dismissing 177 staff members, Air Vanuatu (Liquidator) is now left with 266 staff members who will be undertaking critical tasks at the airport, such, while awaiting the final decision of the company’s future by the Liquidator, Ernst and Young.

On May 31, the Minister of Finance, John Salong, revealed that once a company acquires Air Vanuatu, it will no longer operate under the name Air Vanuatu Operations Limited. Possible new names include Air Vanuatu II or Air Vanuatu Unity.

He also stated that the Minister of Foreign Affairs and the Deputy Prime Minister, mandated by the Prime Minister, are heading a task force with other ministers to examine the future of the airline.

They will determine its name and the extent of Vanuatu’s shares, likely around 49% to 43%.

doddy@dailypost.vu

Air Vanuatu is dead, long live Air Vanuatu!

 

The news of our national airline entering liquidation may have come as a shock to some people, but it was only a matter of time before it succumbed to the unrelenting abuse to which our political class has subjected it for decades. It was the same story that happens anywhere in the world when governments start managing airlines—it almost always ends badly.

On the face of its balance sheet, the company was doomed, with more than Vatu (VT) 7 billion in debt and more than VT100 million of recurring monthly excess costs. Service quality had long been abysmal, with many flights postponed or cancelled. Its board had become a carrousel of mismanagement, with a grand total of 56 directors since 2015 (see for yourself in the VFSC register). Add to this the COVID closures, severe bouts of bad weather, issues with the airport and runway, and sheer bad luck, and you get the perfect picture of an airline running on fumes. Air Vanuatu has been losing money for a long time; in fact most of the past 20 years have been in the red.

The final nail in the coffin was put in by the Court of Appeal (CoA) in February when it ordered Air Vanuatu to pay leasing company Isleno hundreds of millions of Vatu in damages and legal costs, ending 15 years of judicial saga.

The case was about the validity of a lease contracted in 2009, that was later deemed outrageously expensive and rejected by the succeeding Chief Executive Officer (CEO) after he learned that Isleno belonged to none other than the wife of his predecessor. After lengthy proceedings marred by significant political interference, the CoA finally sided with Isleno. To make a long story short, Air Vanuatu ended up with a bill 10 times higher than the purchasing price for an aircraft that it didn’t own – and didn’t even use!

Whatever one thinks of the court’s judgment, let’s all remember that Isleno was the symptom, not the problem.

The problem was that every single Prime Minister, Minister of Infrastructure, Minister of Finance, Minister of Trade, and every member of Parliament with the slightest connection to Air Vanuatu had been using it to trade in influence and financial gains for many years, maybe ever since its inception in 1981.

Isleno is one of the the latest (and arguably the biggest) of a long series of cases of gross mismanagement that plagued the airline as the consequence of years of rampant corruption and nepotism at its helm. If it wasn’t for this drama, a similar one was bound to happen.

A cautionary tale

The lesson to learn here is that Air Vanuatu was doomed by the simple fact that the government was its majority shareholder. Politicians here and everywhere are mere mortals, susceptible to greed and envy. In the absence of clear restrictions to their interference, state-owned enterprises are always vulnerable to abuse.

Successive administrations have used our national airline as a political tool for survival, offering positions and contracts in exchange for prolonged power and the achievement of their political goals. Regardless of whether these goals were well-intentioned or beneficial to the community, the fact remains that Air Vanuatu has emerged increasingly battered from this process.

Perhaps we, citizens of Vanuatu, are all responsible for this mess as we didn’t demand more accountability from our leaders. Had it been a private company, such levels of debt and deficit would have been unimaginable. But since no one seriously attempted to clean it up, it just kept on hemorrhaging cash with strikingly bad decisions, all the while lowering service quality for passengers.

Air Vanuatu’s CEO Joseph Laloyer and his management team have done their best under the circumstances to keep the business operational following the instructions of their shareholder. They have not compromised on safety and have kept us all secure, but the reliability of the airline has been diminishing year after year, despite rising costs.

No Airbus for us

One particularly painful expense was the deposit of VT2 billion made to Airbus in 2019 for no less than four A220 aircraft, with minimal external consultation. It was a bold move that could have worked, seen at that time as the way to save the airline. The new CEO and CFO in charge had a bold plan and a sound budget to achieve profitability, and the board at the time believed in their vision.

The next government proceeded to cancel the order, again with minimal consultation; it was politically justifiable since we had been hit by Covid and now the acquisition of these four jets appeared as an unjustifiable luxury.

The contract with Airbus was one-sided; if Air Vanuatu pulled out, it lost the 2 billion deposit, and Airbus could potentially sue Air Vanuatu for cancellation of commitment.

The good news is that anyone suing Air Vanuatu will get nothing as there is nothing left to steal, nothing left to abuse, nothing left to scavenge.

If Air Vanuatu had been privately owned, there’s a good chance it would have sought to recoup costs by reselling the contract to another operator. There’s huge demand worldwide for the A220 and Airbus probably resold “our” aircraft long ago anyway. But at the unsupervised, unaccountable, government-owned Air Vanuatu, the VT2 billion loss barely deserved a shrug, and apparently no one lost their job over it.

Airbus didn’t lose much in that deal, except for the cost of a few coats of paint on the first A220 in the contract. They ended up 99% in profit while we were thoroughly screwed.

Perhaps the liquidation of Air Vanuatu is a blessing in disguise, as it leaves ample room for entrepreneurs to pick up the slack and limits our government’s exposure to further risks of commercial exploitation by companies like Airbus.

What’s next?

A local company would certainly be preferable for the domestic routes. The government or a public institution like the Vanuatu National Provident Fund (VNPF) could be involved, but as a minority shareholder, and more importantly a silent one, sitting in the back and not trying to interfere in operations in any way, shape or form.

For international liaisons, we should open air service agreements to make it attractive for Fiji Airways and Aircalin to increase traffic to Vanuatu, and for Qantas and Air New Zealand to connect with major cities in their home countries Australia and New Zealand. This would keep Vanuatu well-connected with its Melanesian sister nations (Fiji/Kanaky) as well as these foreign powers who self-describe as development partners (France, New Zealand, Australia).

After all, Australia and New Zealand use a significant portion of our workforce to patch the holes in their labour market for the benefit of their economy; the least they can do is support air connectivity to Vanuatu. The flights would be mostly used by Ni-Vanuatu seasonal workers and students and by their own citizens coming to enjoy our beautiful sights as tourists.

If our development partners fail to convince their commercial airlines to step in, we might have to settle for a deal with Air Nauru or Air Solomon, but this should be the solution of last resort as these airlines have proven themselves highly unreliable in recent months. Let’s just say they have missed their opportunity to shine on many occasions.

One way to incentivize our Western development partners would be to formally request support from our other partner, China. This might seriously get their attention as they tend to prove more supportive when they feel that their influence is waning while China’s is rising.

The market economy is all about incentives. Where there’s demand, there’s supply, barring undue intervention from the state. The most profitable route with Vanuatu is obviously Sydney, but it’s not so clear that it would attract Qantas, as it is quite insignificant for an airline as big and reputable and would not matter much for their bottom line. If we take a good hard look at their incentives, we need them more than they need us. So we can cross our fingers and hope that our development partners in Canberra will push for this to happen.

A new chapter

It is now glaringly obvious to everyone that governmental management is not an adequate governance model for an airline. Our government should instead focus on public services and infrastructure, starting with Bauerfield Airport which is truly unworthy of the capital of a sovereign nation.

We should all recognise that Prime Minister Charlot Salwai and Finance Minister John Salong, along with the Council of Ministers, have proved remarkably clear-headed and responsible as they made the difficult but necessary decision to pull the plug on the wealth-destroying zombie that Air Vanuatu had become. They were the leaders who finally had the courage to stand up and call it a day. As the singer Kenny Rogers would put it, “You’ve got to know when to hold ‘em, know when to fold ‘em, Know when to walk away, and know when to run.”

Martin St-Hilaire is the Managing Director of AJC and also the Honorary Consul of Monaco in Vanuatu.

news@dailypost.vu

Air Vanuatu Liquidators Update

 ✈️

Air Vanuatu employs 441 staff across Vanuatu, Australia, and New Zealand (the Company also has contractors in Fiji and New Caledonia).

This was relayed in the Liquidators’ Statutory Report to Creditors, which was issued yesterday, the 15th of May 2024.

The Report noted that this is a high number of staff for an operation of the Company’s size and nature.

Another update concerns the grounding of the domestic fleets. It was stated that the Liquidators are working to confirm an outcome of the grounding of the domestic fleet as quickly as possible.

More in tomorrow’s newspaper.

Photo: yj-av11-air-vanuatu-de-havilland-canada-dhc-6-300-twin-otter_PlanespottersNet_1329940_a147f5513c_o

AIR NIUGINI WELCOMES ANOTHER BOEING 737 AIRCRAFT

MEDIA RELEASE

AIR NIUGINI WELCOMES ANOTHER BOEING 737 AIRCRAFT

Air Niugini has announced the arrival of its third Boeing 737 aircraft into Port Moresby last night(Sunday 12th May).

Acting Chief Executive Officer, Mr Gary Seddon said the Air Niugini fleet of Boeing 737 aircraft will support the domestic and international operations while progress is made toward the introduction of the new Airbus A220 aircraft from late 2025.

Carrying the registration P2-PXB (Bravo), the new addition has a total of 162 seats: 12 business and 150 economy class. The 737s are replacing Fokker aircraft operations (where possible) as Air Niugini introduces greater capacity on domestic trunk routes, similar to the very popular Lae Express. 

“The Fokker jet aircraft have done a tremendous job over the decades; safely and reliably meeting our air transport needs.  The new Airbus A220s will replace the retiring Fokkers and become the backbone to Air Niugini’s fleet. In the meantime, our Boeing 737s provide excellent reliability, comfort and safety.”

Mr Seddon thanked Air Niugini’s valued customers for their continued support and loyalty. 

“ We look forward to the near future when the challenges of jet fuel and airport infrastructure are behind us. We can focus on expanding our network, providing more value for money, and greater reliability in the schedule.” Mr Seddon concluded.

Ends…//

Pic caption: Air Niugini's third Boeing 737 aircraft, PX Bravo parked at Jacksons International airport, Port Moresby this morning.

Corporate Communications Department

Monday 13th  May, 2024

AIR NIUGINI’S BOEING 767 AIRCRAFT RESUME SINGAPORE AND BRISBANE FLIGHTS

MEDIA RELEASE

Air Niugini’s Boeing 767 aircraft have now resumed operations on the airline’s Brisbane and Singapore flights following the completion of scheduled heavy maintenance checks. 

Over the past six months both our 767 aircraft underwent scheduled C-check maintenance, starting with P2-PXV which returned to service in January, and followed by P2-PXW which returned to service on 20th April. 

The maintenance included a complete refurbishment of the passenger cabins and lavatories.

During this period of scheduled maintenance Air Niugini’s Brisbane and Singapore flights have been operated by Omni Air International under a wet lease arrangement. This lease has now ended. 

Air Niugini acknowledges Omni for the support in the last seven months while ANG’s B767s were away for the normal C checks.

The resumption of the refurbished B767 aircraft is timely as Air Niugini resumes its Tuesday Singapore service on the 07th May, increasing the frequency to a total of 5 weekly services, plus a fourth weekly service to Hong Kong from Monday 01st July.

All Singapore and Brisbane flights are now operated by our refurbished 767s with our own Air Niugini crew. 

We thank our valued customers for your patience and understanding during the time the B767s were away.

Ends…..//

Pic caption: One of ANG's B767 aircraft, PXV at the airport in Port Moresby recently after the scheduled heavy maintenance checks.

Corporate Communications Department

Monday 29th April, 2024

MEDIA RELEASE : AIR NIUGINI DECLARES PACIFIC GUARDIAN REPORT AS FAKE NEWS

Air Niugini is the national airline of Papua New Guinea, and recently celebrated 50 years of operation. The airline proudly serves the people with competent, accessible, reliable air transport services.

A series of online articles written and published by Pacific Guardian attempt to discredit the integrity of the airline, its management team, and its Board of Directors.

The Pacific Guardian report of 17th February 2024 titled “AIR NIUGINI CANCELS LEASE AGREEMENT AT COST OF REPUTATION OF FUTURE LEASES”, made several false and misleading allegations.

1. Air Niugini is NOT cancelling the wet lease agreement early. The SkyUp Airlines Boeing 737 lease agreement is being operated to the full agreed term. The lease is not being cut short.

2. Air Niugini is satisfied that the aircraft has achieved its objectives, though additional flights to other PNG centres would have been preferred.

3. The Air Niugini Acting CEO and his team negotiated the rate with SkyUp Airlines LLC, of Kiev, Ukraine. The terms and duration of the lease arrangement were also negotiated by the Air Niugini team.

4. Air Niugini did NOT pay K30million for ‘extra two engines’ for the ‘Bird of Paradise painted...’ aircraft. The engines were free of any charges, funded entirely by the lessor, as per the terms and conditions of the negotiated arrangement.

5. Air Niugini is NOT on a ‘lease blacklist’, as the SkyUp Airlines lease was not terminated. No such list exists.

6. Air Niugini states the SkyUp Airlines lease arrangement was beneficial. Though, as previously stated, Air Niugini had hoped the aircraft would have serviced more of its domestic network, however limitations and restrictions at domestic airports prevented this from occurring.

7. The Air Niugini management and board, including the Acting CEO and Chairman, have extensive experience negotiating these arrangements. This has been demonstrated widely from the negotiation of aircraft purchase agreements with Boeing and Airbus to arrangements that brought catering services back to the company. The management team boasts some of the most experienced aviation specialists in the industry – experience gained from globally recognised airlines, and not just in PNG.

The management of Air Niugini acknowledges the poor quality of the articles, evidently authored by individuals lacking in-depth understanding of the subject matter. However, such inadequacy does not justify the propagation of falsehoods.

Air Niugini reaffirms its commitment to addressing the challenges stemming from years of mismanagement and poor decision-making. Supported by the board of directors and Kumul Consolidated Holdings, our shareholder, the management team has committed to introduce new aircraft to PNG, in 2025. These new arrivals are currently scheduled to arrive in September, coinciding with our nation's 50th anniversary of independence, marking a significant milestone for Papua New Guinea and Air Niugini, as well as for our loyal customers and dedicated team members.

The Acting CEO and his team are cognizant of individuals seeking to destabilise the airline, some of whom are former Air Niugini employees who owe much to the company. Fabricated news and baseless accusations will no longer be tolerated or overlooked. We are committed to safeguarding the reputation of the Air Niugini team, the company, our board, and our shareholder. Any falsehoods will be rebutted, and we will take legal action against those responsible to the fullest extent of the law.

The management and board of Air Niugini extend their heartfelt gratitude to the SkyUp Airlines team as they prepare to return to Europe after an extended period away from home since December 2023.

Ends…//

Corporate Communications Department, Air Niugini

Monday 19 February 2024

AIR NIUGINI CANCELLS LEASE AGREEMENT AT COST OF REPUTATION OF FUTURE LEASES

Air Niugini management and board have decided to release the SkyUp aircraft as of tomorrow 18th February, one month earlier than planned.

This places Air Niugini's reputation to lease future excellent aircraft as thus one is on the line because they made it much uneconomical by cutting short the lease when originally guaranteed 3 months so secured a very lower lease rate than the one-man(Acting CEO) leased Bird of Paradise painted that has costed extra two engines at a tine of PGK30m+.

The termination of Skyup 737 lease puts future Air Niugini lease on black list .

This inexperience board chairman and Acting CEO needs attention of the people and Government.

This page calls for Government to.look onto this matter asap after the departure of this latest model aircraft. 

 

It truly saved the the unplanned peak period period of this inexperienced faces at Air Niugini Management and board. 

That all do that complaints came to a halt as soon as this aircraft started operations into Lae freed up between 6 to 8 Fokker flight equivalent passenger uplifts. 

The saved fokers then cleared up other backlogs in all other destinations such as Mt Hagen, Goroka, Wewak and Rabaul. 

A master strategy not quite realised yet by few that is not recognised.

This page believes that the next few months will be their telling period. 

We just hope things will fall back into Charlotte levels as underlying causes have yet to be rectified.

The government must not keep a blind eye to such mismanagement of our dear airline