Queensland government hoses down suggestions it is considering bailout for Bonza

A Bonza 737 Max aircraft in Melbourne. Administrators for the grounded airline are pinning their hopes on financial support from the Queensland government. Photograph: Joel Carrett/AAP

The Albanese government has told administrators determining the future of budget airline Bonza it’s unlikely to provide financial support to help save the carrier, but the Queensland government is considering stepping in if a new owner is found.

During a first meeting of creditors on Friday administrators from the firm Hall Chadwick said “we’re moving heaven and earth” to secure a future for the grounded airline.

The firm has been controlling Bonza since its planes were abruptly repossessed at the end of April. It has calculated that in addition to an almost $80m loan from its sole owners 777 Partners, the airline owes more than $20m to other creditors, including employees and customers.

Asked about support from governments, administrator Richard Albarran said discussions were occurring with the federal government on a daily basis.

“The federal government have indicated at this point in time, this doesn’t mean it won’t change, but the federal government has indicated it’s unlikely to be forthcoming in relation to any financial incentives,” Albarran said.

However he said in Queensland – home to Bonza’s bases on the Sunshine Coast and Gold Coast and many of its regional routes – the state government was “considering its position”.

“[An administrator] is speaking to them two to three times a day at the moment so hopefully there will be some assistance … They want to know what’s the strategy for Bonza, who’s the purchaser, so there’s a few things that need to be dealt with, with them and a potential purchaser,” Albarran said.

Almost 60,000 out of pocket customers were eligible to attend the meeting on Friday, alongside the airline’s trade creditors and 323 stood down employees.

The administrators echoed earlier comments that Bonza’s fleet of 737-Max 8 aircraft – four under its name and two lent from a Canadian carrier with ownership links – have had their leases terminated and that even those that remain at Australian airports are ultimately expected to be flown to North America.

The aircraft were made available under leases 49% owned by Bonza’s parent company, the US private investment firm 777 Partners. A reported breakdown in the relationship between 777 Partners and its financier, the US insurance giant Advantage Capital Holdings, known as A-Cap, led to a change in ownership structure of the leased aircraft last month.

A new holding company owned by A-Cap, Phoenix Aviation Capital, took full ownership of the aircraft and subsequently issued orders to recall the planes from Australia.

Administrators said that after talking with the lessors, they had accepted the planes would leave Australia, and that a grounding of operations and employee stand down orders set in place until the end of Tuesday 14 May would probably be extended.

However, discussions have begun to source new aircraft leases within three months or sooner, as well as short term leasing options “for a more immediate solution” in the interim.

Amid a global shortage of planes and order backlogs, it’s unclear what models of aircraft have been offered. There has been concern within the industry that Bonza’s previous business model of relying on the 737-Max 8s supplied by 777 Partners for regional routes made profits tough without selling every seat on a flight.

The Miami-based 777 Partners has reportedly been accused by lenders of fraud and double-pledging of assets that it didn’t own, according to a lawsuit filed in New York last week.

Bonza’s administrators issued a call out for anyone with more information on the dealings of 777 Partners to come forward.

The administrators said there had been “a number of very interested parties” and that they were hopeful a transaction could happen. They said they would be cutting off expressions of interest for potential buyers over the weekend and would then update creditors on the potential shortlist.

The questions about the financial situation of 777 Partners have triggered discussion within Australia’s aviation industry as to whether Bonza’s business plan had been sound, amid reports the airline had been close to a potential takeover from a local business figure prior to being blindsided by the aircraft repossessions.

Most online participants at Friday’s meeting were out-of-pocket passengers, asking questions about securing refunds, circumstances where travel insurance didn’t cover their holiday expenses, issues with getting proof of purchase from the smartphone app Bonza required most to book through, as well as employees wanting to know about their future.