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Thousands stranded as Air Australia goes bust

Update: February, 17/2012 - 11:29

SYDNEY – Budget carrier Air Australia went into voluntary administration on Friday, grounding all domestic and international flights and stranding thousands of passengers.

The news comes a day after embattled Australian flag-carrier Qantas said it was slashing at least 500 jobs, cutting costs and closing two international routes after posting a 83 per cent slump in first-half net profits.

In a statement on its website, the Brisbane-based Air Australia, whose 300 staff have been stood down, said it had appointed KordaMentha as voluntary administrators.

"In the short-term, the fleet will be grounded. It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately," the administrator said.

"For clarity, it also appears highly unlikely there will be any flights in the short to medium term."

Air Australia flew international routes to the Indonesian island of Bali, Thailand, and Hawaii, and domestically to Brisbane, Melbourne, and Perth, Derby and Port Hedland in Western Australia.

Administrator Mark Korda said up to 4,000 passengers were currently overseas with Air Australia return tickets and advised them to find alternative arrangements.

He told ABC radio the airline was unable to buy fuel at Phuket International Airport on Thursday night, prompting fears about the airline's solvency.

"Air Australia was unable to purchase fuel in Phuket to refuel the planes so the directors had a meeting at 1.30 this morning and appointed us as administrators due to the solvency of the company," Korda said.

"The supplier of the fuel wouldn't grant any further credit to the company."

Reports said a flight out of Honolulu was also refused fuel.

The carrier, previously known as Strategic Airlines and relaunched in November 2011 to cash in on underserviced routes, flew five Airbus A330-200 and A320-200 aircraft.

Korda said he was hoping to find a "white knight" to save the airline.

"Hopefully we can find a white knight, if not the operations will stay suspended and then what we'll do is we'll follow up with everybody about how did this all happen?

Qantas chief Alan Joyce, whose own airline has been hit hard by soaring fuel costs and a fleet grounding last year due to labour disputes, said he would do what he could to help stranded passengers.

"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 said.

Joyce said Qantas was also looking at adding supplementary services. - AFP

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