Air Australia collapses after running out of money for fuel, thousands stranded

Passenger and charter airline Air Australia has fallen into administration after running out of cash and being unable to even refuel its planes, with thousands of people stranded overseas as its administrators suspend flights in and out of the country.

The collapse comes less than a day after the company rejected the notion it could be forced into administration. About 300 people will lose their jobs.

John Park and Mark Korda of KordaMentha has been appointed administrator of the Brisbane-based airline, which flies to Melbourne, Perth, Port Hedland and Derby, as well as Bali, Phuket and Honolulu.

“It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately,” a letter from KordaMentha on Air Australia’s website states.

“Overnight the company was unable to refuel its planes in Phuket, the directors appointed us at 1.30 this morning and the boys have been working throughout the night to deal with what’s a very difficult situation,” Korda told Melbourne radio this morning.

Korda said there are about 4,000 people overseas who should not be relying on Air Australia to take them home. “They actively need to manage their own affairs,” he said. “Our call centre can take the calls but they should not be relying on Australia to get them back.”

Korda added that passengers might be able to claim a refund if they bought their Air Australia ticket with a credit card, although those who paid cash might miss out unless they have insurance that covers an insolvency.

Stressing it was early days, Korda – who also worked on the collapse of national carrier Ansett – said it was “possible we’ll be able to find a white knight to save the airline.”

More information would be discovered in the coming days, he added, with a strategy sought in weeks.

The company was founded in 1991 as an air freight broker and changed its name from Strategic Airlines in 2011.

Qantas CEO Alan Joyce, who yesterday flagged 500 job cuts at his airline on the back of high fuel costs and technological improvements reducing labour needs, told the Seven Network this morning that Air Australia customers could buy replacement tickets from his budget airline Jetstar for the same price as Air Australia tickets.

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