The administrators of insolvent Australian LCC Bonza (Sunshine Coast) will hold the first creditor's meeting in Sydney on May 10, as details start to emerge of the airline's rocky state of affairs in the lead-up to its April 30 collapse.
Administrator Hall Chadwick will hold the initial meeting to update the as yet unknown number of creditors and, per Australia's Corporations Act, allow the creditors to decide whether to appoint a committee of inspection and/or remove the current administrators and replace them with new ones. Hall Chadwick also advised that its fees would be AUD250,000 to AUD350,000 Australian dollars (USD165,000-232,000) by the time the meeting is held.
Bonza was forced to cease operations after aircraft lease manager AIP Capital removed the flight manuals from the airline's four B737-8s late on the evening of April 29. Two aircraft were at Sunshine Coast, one at Gold Coast Coolangatta, and one at Melbourne Tullamarine. They have remained on the ground at these locations since. There is also a B737-8 wet-leased from Flair Airlines (F8, Kelowna) at Sunshine Coast. The following day, Bonza CEO Tim Jordan said the seizures were a surprise.
Bonza aircraft default notices issued in mid-April
It has since emerged that Bonza's directors were issued notices of default on April 17 and there are reports the airline stopped paying its bills, including its aircraft leases, in February. Bonza continued selling tickets up until the time the aircraft were seized, raising questions of trading while insolvent, which renders the directors liable to civil and criminal penalties, including prison terms.
Three connected entities have filed for voluntary administration, a court-supervised process offering creditor protection similar to US Chapter 11 provisions. The first, 777 Oz HoldCo Pty Ltd, has three directors, Steven William Pasko, Adam Randall Weiss, and Manish Bhisma Raniga. Pasko is the founder and managing partner of 777 Partners, Bonza's majority shareholder. Weiss is a 777 Partners vice president. Raniga, a former CCO at South African Airways (SA, Johannesburg O.R. Tambo), left his role at 777 Partners in November 2023 to set up an entity called Stealth Startup. However, Australian Securities and Investment Commission records show he retains the directorships in the Bonza entities. Raniga told ch-aviation he remains on the boards on a contracted basis and serves in an advisory role.
777 Oz HoldCo owns 100,089,866 of the 100,100,001 shares issued by Bonza Aviation Pty Ltd, the Bonza operating entity. Pasko and Weiss are both listed as directors alongside Jordan and Bonza's chief financial officer, Lidia Valenzuela. Bonza Aviation is the lead entity in the voluntary administration proceedings. The third insolvent entity, Ops in a Box Pty Ltd, lists Weiss, Pasko, and Raniga as directors, alongside Richard (Rick) Scott Howell, an Australia-based aviation investments principal with 777 Partners. 777 Oz HoldCo owns all 100 shares issued by Ops in a Box.
Taking B737-8s was the price of support from 777
Bonza started scheduled operations in early 2023. Its network covered 21 airports in four states and one territory, primarily thin point-to-point routes to smaller cities ignored by other airlines. The proposed operating model was controversial from the start because it was lifted from countries with high population densities. It now turns out Jordan's initial business plan proposed operating 72-passenger turboprops and would require generating around AUD50 (USD33) per passenger in ancillary revenue to break even.
His business plan failed to attract any investment interest except from 777 Partners, which had recently acquired a minority stake in Flair and at that point had aviation ambitions. 777 had also acquired the rights to buy twenty B737-8s from Boeing. However, the manufacturer was not prepared to hand the aircraft to a start-up lessor which, aside from its new Flair investment, had no prior aviation experience. But Boeing was prepared to hand aircraft to an entity that "incubated" airline start-ups it could place the planes with. Jordan came knocking at the right time but the price he paid was taking 186-passenger B737s rather than the 72-seat turboprops. It presented Jordan with far higher costs and far more seats to fill.
In the washup of Bonza suspending flights on April 30, scrutiny of 777 Partners' role in proceedings and its finances has increased. While its funding source was always uncertain, the Australian Financial Review reported that its key funder until recently was US insurer Advantage Capital (ACap). Unfortunately for 777, ACap turned off the funding tap earlier this year, which meant 777 was unable to keep financially supporting lossmaking Bonza, resulting in the carrier not having the money to pay its leases (or other bills). ACap was the entity that called in restructuring specialists KordaMentha in April to advise on whether to keep supporting Bonza.
Between Bonza's launch and now, ownership of the 20 aircraft has passed to an ACap-controlled entity called Phoenix Aviation Capital, while the once 777-controlled AIP Capital retains management rights. The Bonza aircraft are believed to be going to LOT Polish Airlines (LO, Warsaw Chopin).
In the same week that Bonza went bust, 777 Partners sold down almost all of its circa 25% stake in Flair Airlines, effectively ending its foray into aviation.
Meanwhile, Bonza's 280 now mostly stood-down employees were told during a virtual town hall meeting late last week that their April salaries, due for payment on May 5, would not be paid. Despite initial assurances of a refund, administrators have also advised Bonza ticket holders not to expect payment anytime soon.
Editorial Comment: Information about Manish Raniga in paragraph five corrected. - 08May2024 - 21:06 UTC