Friday, February 17, 2012

Air Australia / Strategic Aviation Ceases Operations

Air Australia, previously known as Strategic Aviation, went into voluntary administration in the early hours of Friday 17 February and subsequentially ceased operations. The airline had only a few days ago denied that it was entering into administration and was still taking bookings the day before the announcement was made. Thousands of passengers are affected by the shutdown, with many stranded overseas.

KordaMentha has been appointed as administrators, and are best known for handling the administration of Ansett Airlines when it shut down. KordaMentha has stated on the Air Australia website that "It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately. For clarity, it also appears highly unlikely there will be any flights in the short to medium term. The Administrators will decide on the strategy for the group during the following days and weeks."

Air Australia's troubles had possibly began much earlier. In 2010, when the airline was named Strategic Aviation, it lost a $30million contract with the Australian Defence Force (ADF) to transport troops to the Middle East. It then restructured as a full-service carrier operating scheduled flights with an Airbus A330, as well as operating Airbus A320 aircraft around Australia, including for a brief time, services between Gladstone and Brisbane. Sadly though, Strategic cancelled these services as it reportedly found the competition from QantasLink too great.

In early 2011, one of the two key shareholders pulled out, and by November 2011, Strategic Aviation restructured again as a lower-cost airline under the new brand name of Air Australia. CASA reportedly expressed concerns as to whether the airline could meet its safety requirements, and in December 2011, insolvency insurance coverage for Air Australia was withdrawn. Air Australia also claimed that it would make a profit in 2011/12, but said it was looking for "cornerstone" investors. It was rumoured that the airline had debts of $30 million, and that creditors had begun closing in. Earlier in the week, reports began circulating that administrators KordaMentha were being consulted.

No comments:

Post a Comment