Home to a permanent population of just under 330,000, the small island country of Vanuatu is highly dependent on flying for everything from bringing in supplies to getting on and off the island.
The closest country of New Caledonia is over 400 miles away in the South Pacific Ocean while Australia’s Brisbane is approximately 1,200 miles and a two-hour, 40-minute flight away.
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That is why flagship carrier Air Vanuatu’s sudden declaration of bankruptcy and cancelation of same-day flights in May 2024 left many fearing that the isolated nation would be left without an airline.
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Once near liquidation, Air Vanuatu is making a comeback
Australia-based Ernst & Young liquidators Morgan Kelly, Andrew Hanson and Justin Walsh stepped in to guide the airline into either a turnaround plan or liquidation.
This was a process that ended favorably for the airline as a special-purpose corporation owned by Vanuatu’s Ministry of Foreign Affairs called AV3 Limited has now agreed to purchase the airline, while EY is stepping down from its role as liquidators and instead guiding it through restructuring its debt.
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A deed of compromise filed by a local court states that Air Vanuatu’s conditions for its creditors have now been satisfied, while the first step in restructuring involves a payment of $3.3 million USD to lessors. The first payment of $1.1 million will be made immediately, while the others will come a subsequent four and 10 months later.
If those payments are not made, the creditors who include international banks could file for a motion to dismiss the deed of compromise that would bring the airline back to the need for liqudiation.
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‘An opportunity for the Air Vanuatu business to continue’: Ernst & Young
“The implementation of the Deed of Compromise maximizes the return to creditors and presents an opportunity for the Air Vanuatu business to continue, saving jobs and providing vital aviation services for Vanuatu,” Kelly said of the plan. Kelly also formerly called the existence of a Vanuatu-based airline ”critical to the people of the Republic of Vanuatu and a strategically important business to the nation.”
The airline was declared to be officially out of liquidation on Oct. 11, while some domestic flights have already been running for several weeks. It has not yet committed to a timeline for restarting the international flights to places like Australia, Singapore and New Caledonia from which the bulk of its tourists come.
When the flights were suddenly canceled back in May, tourists left on the island suddenly found themselves scrambling for seats on a few limited flights from Singapore Airlines (SINGF) or looking for other (and naturally very limited) options to get off the island
A group of Australian student volunteers and organizers on a teaching trip ended up getting rescued from the even smaller island of Tannu by a circling P&O Cruises Australia Ship. The Discovery Paradise ship was on a 10-day “Discover Vanuatu” journey and so the students were able to enjoy a few additional stops in the South Pacific before coming back home to Sydney.
The initial bankruptcy announcement came after Air Vanuatu struggled to make repairs on aircraft it needed to run flights.
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