Gov't Shelf Company Pays Second $1.1 Million Instalment for Air Vanuatu

The government-owned shelf company that now owns Air Vanuatu has made the second of three USD1.1 million payments, according to a March 15, 2025, letter to creditors seen by AeroSouthPacific.

The letter, on a Ernst & Young letterhead, is signed by Andrew Hanson, the compromise administrator and former liquidator. He says the final payment from AV3 Limited is due on June 21, 2025. AV3 Limited is a holding company established by Vanuatu's Department of Foreign Affairs

Vanuatu's government pulled the plug on Air Vanuatu last May, suspending services after it accrued debts it could not service. The government called in consultancy firm Ernst & Young to sell Air Vanuatu. Ernst & Young undertook a sales campaign and ultimately advised creditors that AV3 Limited represented Air Vanuatu's best hope. This was despite assorted former governments mismanaging the carrier.

The US3.3 million payment, to be paid in three instalments, was one of several sweeteners offered by AV3 Limited to secure the airline. With another USD1.1 million in the kitty, Hanson says any creditor who fails to make a claim on or before April 25, 2025, will be excluded from the benefit of any distribution.

When Air Vanuatu was liquidated, it had debts of approximately USD66 million. Ernest & Young later accepted another USD7.5 million in creditor's claims for a total of USD73.5 million.

"As previously reported to creditors, it is currently estimated that ordinary unsecured creditors will likely receive approximately USD5 cents in the dollar on any admitted claims," Hanson writes.

Hanson says creditors will be notified in writing of the compromise administrators' decision regarding the admission, partial rejection or rejection of their claim once claims have been adjudicated.

The Vanuatu Government says it will prioritise rebuilding Air Vanuatu as a domestic operator and has set aside USD8 million in the 2025 Budget to buy two new DHC-6-300s.

Since Air Vanuatu ended its international flights, other carriers, including Solomon Airlines, Qantas, Jetstar, and Virgin Australia, have started or increased flights to Port Vila.