The liquidator of Air Vanuatu (NF, Port Vila) has said it will cut 170 jobs at the grounded carrier to right-size the airline’s cost base and prepare the business for sale or recapitalisation.

“The restructuring at Air Vanuatu today is an unfortunate but necessary step to give the business the opportunity to bring on board new investors and capitalise on strong domestic and international demand for travel,” Sydney-based Ernst & Young partner Morgan Kelly said on May 31.

Air Vanuatu employs more than 440 staff. The airline stopped flying in early May, ending intense local speculation about its future. It also emerged that AerCap has repossessed Air Vanuatu's sole jet, a B737-800 sent to Melbourne Tullamarine in January for its C-check, leaving it with an out-of-service ATR72-600, three DHC-6-300s (one out of service), and a single BN-2 (also out of service). ch-aviation is aware that Air Lease Corporation is transferring the B737-800 to an Asia-based carrier.

Vanuatu's deputy prime minister, Matai Seremaiah, said all laid off employees would have their entitlements and severance payments honoured.

Interested parties have until June 7 to lodge an expression of interest in Air Vanuatu. Kelly says he wants to find a solution to Air Vanuatu. "We share the Vanuatuan government’s view of strong demand for tourism driving international demand, and this to support demand for key domestic routes,” said Kelly.

Meanwhile, Seremaiah told local outlets that Air Pacific (Nadi) was interested in taking over the Port Vila-Tanna and Port Vila-Espiritu Santo routes using either an ATR42-600 or an ATR72-600. Other airlines have also stepped into the capacity vacuum caused by Air Vanuatu's grounding, with Solomons - Solomon Airlines (IE, Honiara) taking over the Port Vila-Auckland International route. Virgin Australia (VA, Brisbane International) has increased frequencies on its Brisbane-Port Vila run and will start Sydney-Port Vila flights five times per week later this year. Qantas also plans to return to Vanuatu in August using a mix of B737-800 and E190 equipment, while Jetstar Airways has applied with the authorities to start flights to Port Vila in October.