Air Vanuatu (NF, Port Vila) has grounded its aircraft, cancelled flights, and axed its board after it asked Ernst & Young to advise on whether it should file for voluntary administration. The chairman of the now defunct board, Alain Lew, told Port Vila's Daily Post that the government approached the administrators on May 6. Several days before that, a lessor filed an insolvency claim against the airline.

The airline has cancelled around 20 flights to Australia, New Caledonia, and New Zealand through to May 12 inclusive. Flights beyond that date are currently under review.

"The Vanuatu government is now considering placing Air Vanuatu, the national carrier of Vanuatu, into voluntary administration," a May 8 Air Vanuatu statement reads. "The international firm Ernst & Young has been appointed to assist the Vanuatu government in reviewing available options and put forward recommendations to the Vanuatu government."

Last month, Vanuatu's finance minister said speculation about the embattled airline's future was "rumour mongering on Facebook." John Salong said neither the board of directors nor the shareholders (the government) had not made any decisions about bankruptcy, receivership, or voluntary liquidation. "Air Vanuatu has had challenges for a long time, which are now coming home to roost," he said. "Everybody is making it look like this is an emerging issue, but it has been an issue for a long time, and rumour-mongering doesn't help."

The airline's single jet, a B737-800, has been out of service since January when it ferried to Melbourne Tullamarine for its C-check. The aircraft remains in Australia and Air Vanuatu has been using wet-leased aircraft supplied to Nauru Airlines (Nauru) and Solomons - Solomon Airlines (IE, Honiara) to plug the gap. Air Vanuatu also has one ATR72-600 and two DHC-6-300s which it uses on local flights. ch-aviation has contacted a representative of both airlines about ongoing flights.

The Daily Post also reports on a failed 2018 appeal by Air Vanuatu, the judgement of which was only released in February 2024 after an associated criminal trial ended. Air Vanuatu (Operations) Ltd (AVL) had unsuccessfully appealed the result of Air Vanuatu Operation Ltd v Isleno Leasing Co Ltd. The appeal by the airline had sought to set aside an award of VUV150 million vatu (USD1.25 million) to Isleno. On May 2, Isleno filed a petition to initiate liquidation proceedings against Air Vanuatu in the Supreme Court of Vanuatu, saying the carrier had not paid the amount owed.

The director general of the Vanuatu Prime Minister's Office is reported to have approached Ernst & Young, which confirmed to ch-aviation their involvement in the matter.

"Ernst & Young representatives arrived in Port Vila today (May 9) to begin an assessment of Air Vanuatu’s financials and are being assisted by the Vanuatu government and the Air Vanuatu team," the statement said.