Thread: Air Australia Fleet Grounded.

http://www.theaustralian.com.au/busi...-1226273724397

Thousands of Australians are stranded in Thailand as budget carrier Air Australia goes under

• by: Steve Creedy, Aviation writer
• From: The Australian
• February 17, 2012 1:56PM

Screen grab from the Air Australia home page showing Korda Mentha has been appointed to administrate the company.
Source: Supplied

ADMINISTRATORS of the grounded carrier Air Australia are attempting to sell the stricken company, as thousands of passengers are left stranded abroad.

KordaMentha’s Mark Korda said administrators would be calling for immediate expressions of interest in the sale of the seven companies making up the business.

The airline’s fleet of five A320 and A330 aircraft was grounded early this morning after it ran out of money and could no longer pay for fuel. Other companies in the group include a charter and maintenance operation.

The airline’s 300 staff were expected to receive basic guaranteed entitlements of pay, superannuation and up to 16 weeks redundancy. But it is understood there is little left for creditors and as many as 4,000 stranded passengers have been told to make their own way home.

Other airlines offered to either accept Air Australia tickets or fly the stranded passengers at reduced fares and the administrators have told them to contact credit card companies or travel agents. People who paid cash will be out-of-pocket unless their travel insurance covers insolvency.

It comes as the airline was denying it was broke as late as yesterday and on Wednesday had been continuing to sell tickets. Air Australia employed 300 staff, most of whom had been stood down immediately, said KordaMentha.

Mr Korda said up to 4,000 passengers were currently overseas with Air Australia return tickets.

"We strongly recommend that people organise their return flights sooner rather than later," he told Fairfax radio.

Mr Korda said the administrators had been contacted early today and appointed after the company was unable to pay for fuel.

"Overnight the company was unable to refuel its planes in Phuket, the directors appointed us at 1.30 this morning and the boys have been working throughout the night to deal with what's a very difficult situation," Mr Korda said.

Qantas CEO Alan Joyce said this morning Qantas and Jetstar would assist passengers left high-and-dry.

"They're actually very full on Jetstar services but Jetstar is looking at adding supplementary services to help those passengers,'" Mr Joyce told the Seven Network.

Mr Joyce said Qantas was also looking at adding supplementary services.

"If the (Air Australia) passengers come to a Qantas desk, a Jetstar desk, show their ticket, we'll give them a ticket for the same value they've paid with Air Australia,'' he added.

"So they don't have to pay any more and they can try and recover that fare from their travel agencies or their credit card suppliers.''

Workplace Relations Minister Bill Shorten told ABC radio this morning that the government would step in to help Australians stranded by the airline's collapse.

With reports emerging on ABC radio that Air Australia paid overseas crews as little as $90 a day including meals, Mr Shorten said there was no case for paying crew "third world wages" within Australia.

"International airlines flying in and out of Australia are not governed automatically by the same wages and conditions, but if they are doing domestic sectors in Australia, that is not on," he told ABC radio in Melbourne.

Mr Shorten said the airline, which offered return flights to Thailand for as little as $600, had a business model that was not sustainable.

"People say the way of the future is to cut wages (and) cut conditions," he said. "I don't believe that just cutting wages, cutting conditions, leads to quality, reliability or sustainability."

Mr Shorten said the government's first priority was to assist stranded travellers, but he would also contact the Fair Work Ombudsman about the airline's wage structure.

Shadow treasurer Joe Hockey said he was also concerned that an airline that had Australia in its name was paying crew as little as $90 a day.

KordaMentha said it would decided a strategy for the group during "the following days or weeks" and said people could refer to Air Australia's website for updates.

The administrators warned they were solely responsible for the group and businesses should not incur any costs or perform any work for the airline without a formal purchase order or consent form from them.

Just days ago, the airline denied it was in difficulty when posed questions by The Australian.

At that point, The Australian was told the company was under the pump from several of its creditors, including air navigation provider Airservices Australia and two major airports. Airservices is understood to have initiated court action over the money it is owed but a spokesman said the organisation did not comment on individual customers.

Melbourne Airport would not comment but Perth Airport chief executive Brad Geatches said his organisation was insisting that Air Australia pay outstanding charges. "We're not aware where others might be on the subject but we will be quite insistent on receiving payment," Mr Geatches said. "We are sensitive to these matters; I've got two Ozjet aircraft sitting on my airfield that are a constant reminder to our company of the risk associated with airlines failing."

The Brisbane-based airline serviced Australian domestic destinations such as Melbourne, Brisbane, Port Hedland and Derby as well as Bali, Phuket and Honolulu. It had also been seeking rights to Vietnam, China and the US.

Mr Korda said it was too early top predict the ultimate position of Air Australia or to be precise about the reasons for the group’s problems.

It was previously known as Strategic Airlines but relaunched in November 2011 as Air Australia with a view to cash in on under-serviced routes.

Chief executive Michael James said during the relaunch that he would not be attempting to compete with Qantas or Jetstar.

"I think it is re-educating Australia that you don't have to go via Sydney anymore," he told reporters at the time.

The announcement comes a day after Qantas announced it was shedding 500 jobs due to tough business conditions.