Bonza's administrators' legal team informed the Federal Court that the airline's fleet is likely to be relocated from Australia, as internal correspondence among its backers, lessors, and financier revealed foreknowledge of plans to repossess the planes weeks prior to passengers being stranded.
Justice Elizabeth Cheesman was briefed on Tuesday that the airline's grounded Boeing 737-Max 8s are not under the carrier's control, as their leases were terminated just over an hour before the administrators were appointed on April 30.
James Hutton, SC, representing Hall Chadwick, the airline's administrator, stated, "Consideration was given to every possible means to retain or bring into the administration the aircraft"
“We do not assert we have possession of them, we don’t [and] the lessors have expressed such an intention [to fly them from Australia] and we are not in a position where we are able to bring an application to prevent that from occurring should it otherwise occur.”
The administrator announced on Tuesday that all Bonza flights up to May 15 are cancelled, extending the previous cancellation period by a week. Customers with bookings during this period are advised against going to the airport.
Documents obtained show that Bonza's US parent company was aware of its aircraft lessor's intentions to repossess its fleet to alleviate debt pressures in mid-March. Private equity owner 777 Partners was included in the communication loop between executives at financier A-Cap and the co-founder of aircraft lessor AIP Capital.
"We’ll need to revisit in one week to keep them calm, but this should help. We are moving full speed ahead to get the planes out of there ASAP and wind this up,” an email from AIP's Jared Ailstock to AIP executives Kenneth King and Carson McGuffin read.
This email was subsequently forwarded by 777 Partners' Kevin Burgos to Bonza's chief financial officer Lidia Valenzuela to reassure her that the aircraft leases had been settled. Multiple sources revealed that the forwarded emails caused concern within the airline.
Two weeks later, Bonza received four notice-of-default notices for its leases, signed by 777 co-founder Joshua Wander and AIP Capital general counsel Greg Kahn. Bonza's lenders then sought advice from restructuring firm KordaMentha on how to proceed with the airline, despite Bonza's repeated denials.
Bonza entered voluntary administration and appointed Hall Chadwick as its administrators on April 30 after its four aircraft were repossessed, leading to the grounding of all flights. The airline's CEO Tim Jordan informed staff that he and 777 Partners had been "taken aback" by the repossession proceedings against all four aircraft.
Hall Chadwick's legal team confirmed before the Federal Court on Tuesday that the airline's aircraft are no longer part of the company, and AIP intends to relocate them from Australia.
“We are not presently in a position to assert that the aircraft are part of the administration. We are proceeding on the basis that the rights of termination were validly exercised prior to appointment,” Hutton said
Over the weekend, UK asset management firm Leadenhall Capital initiated legal action against 777 Partners in New York, alleging that the private equity group had borrowed against assets worth $US350 million ($529 million) that it did not own, did not exist, or were pledged to another party.
If the borrowers did not actually own the assets pledged as collateral or had already pledged those assets to another lender, the entire facility would effectively become an illegal and unsecured piggy bank that an individual like 777-cofounder Joshua Wander could use to finance risky private equity investments in aviation, media and sports, including professional football teams while paying lower rates under the pretence of secured financing,” said the documents filed by Leadenhall.
Shadow Transport Minister Bridget McKenzie called on the federal government to clarify the level of assistance it intends to provide to Bonza's customers and staff.
“It’s the responsibility of the Albanese government to direct federal regulators to immediately investigate 777 partners’ financial dealings, especially given Bonza is not the only Australian asset...,” McKenzie said on Tuesday.
777 Partners also owes a significant portion to Victorian football club Melbourne Victory.
McKenzie pointed out that Albanese had previously urged the Coalition government to intervene to support Virgin's affected customers and staff when the airline briefly entered administration in 2020.
Original Article - Sydney Morning Herald
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