Hundreds of workers have been left in limbo after they were sacked from stricken budget airline Bonza without any way of accessing their entitlements.
Administrator Hall Chadwick told the company’s 323 staff in a meeting on Tuesday their employment would be terminated after it failed to find a buyer for the grounded carrier.
Hall Chadwick says it is still talking with potential suitors but has come under fire for not liquidating the company sooner so workers can become eligible for government support.
Interested parties had been set a deadline of June 7 to submit a purchase proposal, but no binding offers were lodged.
Bonza’s Boeing 737 Max 8 planes have been repossessed by lessors. (HANDOUT/BONZA)
“While this is not the news stakeholders wish to hear, the administrators must make a decision with respect to the stand down of the employees,” Hall Chadwick said in a statement.
“Furthermore, customers need certainty regarding the operation of future flights.
“As a result, the administrators have no option but to terminate all employees and cancel all future flights.”
Workers had been stood down without pay since April when the airline went into administration and its six Boeing 737 Max 8 planes were repossessed by lessors with debts of about $110 million.
Hall Chadwick said it continues to investigate the airline’s finances and will meet creditors to decide its future once completed.
Bonza is yet to enter into liquidation after the Federal Court in May extended the deadline for administrators to find a buyer until July 29.
Related story: Bonza calls in administrators after flights suspended
If the company is placed into liquidation, employees would be entitled to payments through the federal government’s fair entitlements guarantee scheme.
But militating against liquidation is Bonza’s possession of a valuable air operator’s licence, which is not transferable and would most likely be forfeited if the company went into liquidation.
The Transport Workers’ Union said it was incredibly difficult news for Bonza employees and called on the federal government to establish a commission to rebuild the industry’s workforce.
“It’s a dark day for regional communities across Australia which remain isolated through unaffordable or unavailable air travel to remain connected with the nation,” the union’s national secretary Michael Kaine said.
Mr Kaine said Hall Chadwick had “taken some strange decisions” by not moving faster to liquidate the airline.
“These workers can’t access the fair entitlements guarantee scheme until the company has formally been put into liquidation,” he said.
“The administrators chose not to take that step today and what that means is these workers are still in limbo.”
Opposition transport spokeswoman Bridget McKenzie called on the government to ensure Bonza workers received their fair entitlements and accused Labor of overseeing a decline in competition in the aviation sector.
Market concentration in the industry is already high, with Qantas, its subsidiary Jetstar and rival Virgin flying almost 95 per cent of all domestic passengers.
Bonza operated as a low-cost domestic airline primarily servicing regional locations in Australia.
Creditors were told at their first meeting the airline owed almost $77 million across two loans, almost $16 million to trade creditors and another $10 million to landlords.
Other debts include more than $5 million owed in staff wages and annual leave entitlements and $3 million to government authorities such as the Australian Taxation Office.
Virgin Australia has offered to prioritise roles for workers who have lost their jobs at Bonza.
