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Air Vanuatu files for bankruptcy after flight cancellation

Air Vanuatu filed for bankruptcy protection on Friday, a day after the South Pacific state-owned airline canceled all its international flights, stranding thousands of travelers.

The airline canceled more than 20 flights to and from the Australian cities of Sydney and Brisbane on Wednesday, as well as the New Zealand city of Auckland for the rest of the week.

The airline said this was the result of “prolonged maintenance needs” on its planes.

Morgan Kelly, Justin Walsh and Andrew Hanson of Ernst & Young Australia have been named liquidators in a US Chapter 11 equivalent bankruptcy, the company said in a statement. The liquidators said safety and maintenance checks would be carried out before normal operations resumed.

Mr Kelly said the airline’s current management team would remain in place.

“Air Vanuatu is essential to the people of the Republic of Vanuatu and represents a strategically important business for the nation,” Mr Kelly said. “Our team works closely with management to ensure continuity of service to customers and ensure services continue as seamlessly as possible.

“The outlook for the airline is positive, despite pressures across the sector, and we will focus on securing the future of this strategically vital national carrier.”

Affected travelers will be informed of this disruption and will be able to rebook their flights as soon as operations resume, the press release indicates.

Air Vanuatu operates four aircraft, including one Boeing 737 and three turboprop aircraft.

Tourism contributed 40% of Vanuatu’s gross domestic product.

The Vanuatu Tourism Board has apologized to travelers for the disruption.

“This is an evolving situation and we will continue to issue updates,” the office said in a statement.

The office’s chief executive, Adela Issachar, said the administrator was in talks with Virgin Australia and Fiji Airways, airlines currently serving Vanuatu, about transporting stranded passengers.

“The updated schedule should be announced soon, we are all looking forward to it,” Ms Issachar told Australian Broadcasting Corp.

Mr Kelly said Air Vanuatu had been hit by labor shortages, rising operating costs, high interest rates and tropical cyclones on tourist numbers in recent years.

“We will look at all options. And the Vanuatu government has indicated it would prefer to resume operations as quickly as possible. Our role as voluntary liquidators will be to evaluate all options to achieve this and make this sustainable,” Mr Kelly told reporters.

“So that could involve some sort of sales process, it could involve some sort of partnership agreement with another airline,” he added.

Australian tourist Sally Witchalls said she and four friends were leaving their Port Vila hotel on Wednesday morning when they were told at reception that their Air Vanuatu flight would not be flying that day.

She has since discovered that her travel insurance did not cover an airline going into liquidation, as Air Vanuatu had done, or going bankrupt.

“We are now on our own to determine how we are going to pay for accommodation from now on while we wait to see how the situation with Air Vanuatu develops,” Ms Witchalls told the ABC.