Air Vanuatu (NF, Port Vila) is resuming limited domestic operations using its ATR72-600 and two DHC-6-300s almost four months after the state-owned airline suspended all flights and called in the liquidators. The ATR, YJ-AV73 (msn 1358), has recommenced flights between Port Vila and Tanna, while the two Twin Otters, YJ-RV10 (msn 679) and YJ-RV14 (msn 527), are expected to resume flights to the outer islands later this week.
A Britten Norman BN-2 registered as YJ-008 (msn 2172) remains AOG for maintenance reasons, while a third DHC-6-300, YJ-AV11 (msn 564), is also out of service because of a protracted dispute with its owner and financier, local businessman John Buchan.
Liquidator Morgan Kelly, a partner at Ernst & Young's (EY) Sydney office, said resuming domestic operations is important, and the flights are a critical part of the country's transport infrastructure. "This is a major step in the restructure of the airline," he said.
As recently reported by ch-aviation, a sales campaign conducted by EY generated eleven expressions of interest, including seven to recapitalise and restart the airline. The liquidators eventually settled on a shelf company recently established by Vanuatu's Ministry of Foreign Affairs as the optimum choice. That decision was controversial locally, given the Vanuatu government and its various administrations had let the airline's finances, management, and operations deteriorate to the point that it was in significant financial distress and unable to pay its debts.
Separately, the owner of YJ-AV11 has criticised EY for not classing him as a special creditor and only proposing to pay out 5% of the USD1.5-2 million he claims he is owed, per the terms of the Deed of Compromise circulated earlier this month. Buchan told Vanuatu's Daily Post he acquired the Twin Otter for Air Vanuatu in 2013 under an arrangement that would see the airline pay it off over ten years.
Payments stopped in 2020 when new management was installed at Air Vanuatu, although payments did later resume. "There’s a considerable amount of money owed on the aircraft, and the liquidators deny that Air Vanuatu owes me or my family further payments, even though I legally have the right to take possession of the aircraft and depose of it anyway I chose," he told the newspaper. "I, as the holder of a lien over the aircraft, legally secured the aircraft via a locked chain around the nose wheel together with a notice of advice. However, the liquidators, in an act of piracy, illegally removed my chain and threatened me for trespassing even though I was on the airport legally with my AVL security pass."
Buchan filed an insolvency claim against Air Vanuatu at the start of May, one factor in the government's decision to ground flights and call in EY a few days later. The liquidators have disputed the validity of his contract with Air Vanuatu. However, the Daily Post reports that Vanuatu's Financial Service Commission holds a registered copy and Vanuatu's Supreme Court has issued orders concerning the aircraft.
"We have to go to court again to overturn the liquidators’ ruling,” Buchan said. "I hardly think the liquidators will overrule a court order as proof of a secured creditor.”
