Bonza’s lessors push ahead with plans to remove planes from Australia

The lawyers for Bonza’s administrators have told the Federal Court the airline’s fleet will likely be removed from Australia as internal emails between its backers, its lessor and its financier confirm they knew of the plans to seize the planes weeks before passengers were left stranded.

Justice Elizabeth Cheesman heard the airline’s grounded Boeing 737-Max 8s are not in possession of the carrier because their leases were terminated just over an hour before the administrators were appointed on April 30.

One of Bonza’s grounded Boeing 737 Max-8 aircraft on May 1.

“Consideration was given to every possible means to retain or bring into the administration the aircraft,” said James Hutton, SC, who acts on behalf of Hall Chadwick, the airline’s administrator.

“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 on Tuesday said all Bonza flights until May 15 are cancelled, extending its previous cancellation period by one week. Customers with bookings during this period are advised not to travel to the airport.

Documents seen by this masthead show Bonza’s US parent group knew of its aircraft lessor’s plan to seize its fleet to alleviate debt pressures in mid-March, as first reported by The Australian Financial Review.

Bonza’s private equity owner 777 Partners was looped into the email sent on March 22 between executives at its financier A-Cap and the cofounder of its aircraft lessor, AIP Capital, which detail A-Cap’s plan to extract the aircraft from Australia and shut down the fledgling airline. 777 Partners’ 49 per cent stake in AIP was taken over by A-Cap earlier this year.

“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,” the email detailing Bonza’s debts from AIP’s Jared Ailstock to AIP executives Kenneth King and Carson McGuffin reads.

This email was then forwarded by 777 Partners’s Kevin Burgos to Bonza’s chief financial officer Lidia Valenzuela in an attempt to reassure her the aircraft leases had been paid. Multiple sources who spoke to this masthead said the forwarded emails caused distress at the airline.

Two weeks later, Bonza was sent four notice-of-default notices for its leases. Two of them were signed by 777-cofounder Joshua Wander, and the two remaining were signed by AIP Capital general counsel Greg Kahn. Bonza’s lenders then engaged restructuring firm KordaMentha for advice on what to do with Bonza, even though the airline has repeatedly denied this.

Bonza entered voluntary administration and appointed Hall Chadwick as its administrators on April 30 after its four aircraft were seized and all flights were grounded. The airline’s boss Tim Jordan told staff he and 777 Partners had been “surprised” all four aircraft were subject to repossession proceedings.

Hall Chadwick’s lawyers confirmed before the Federal Court on Tuesday the airline’s aircraft are no longer part of the company, and AIP intends to fly them away 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 lodged legal action against 777 Partners in New York and alleged the private equity group borrowed against $US350 million ($529 million) worth of assets it did not own, that did not exist or were promised to someone else.

“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.

“Through these attempted restructuring negotiations, 777 Partners has admitted time and again that it does not control its own operations and ability to perform,” Leadenhall claimed.

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