February 29, 2012
SYDNEY (AFP) - Collapsed budget carrier Air Australia owes creditors Aus$90 million (US$97 million) and a government rescue package will cover little more than half of its unpaid wages, a report said Wednesday.
Air Australia went into voluntary administration earlier this month, grounding all of its flights and stranding thousands of passengers, little more than three months after relaunching itself as a budget passenger airline.
Administrators for the carrier, KordaMentha, met about 100 creditors in Brisbane on Wednesday to outline the situation, warning that the airline had debts worth $90 million and few assets to sell.
ANZ bank, the airline's largest creditor, is owed $20 million.
"Our prognosis is the airline is not saleable, but we have had four expressions of interest for the sale of the engineer business," Korda told creditors, according to Australian Associated Press.
"Because the company leases its buildings, leases its planes, leases its equipment, you don't have a lot of assets," he added.
"There's not a lot to sell."
Korda said unpaid wages for some 300 staff would be met by the Australian government but capped at $118,000 per employee, meaning only $5 million of the $8 million owed would be met.
Air Australia, previously an air-charter company known as Strategic Airlines that relaunched into the passenger market to try and capture customers after the Qantas strike and grounding, would likely go into liquidation, Korda added.
"I think their strategy was to start up a low-cost airline, and in my experience that is a very difficult undertaking," he said.
