An urgent recovery plan for Air Vanuatu (NF, Port Vila) is to be presented to shareholders and the airline’s board by January 15 by newly-appointed Chief Executive Officer Atu Finau, who only assumed office last week.

In preparation, Finau was studying the airline’s financial position, reviewing decisions made on fleet acquisitions, re-examining all aspects of domestic flight operations, and seeking ways to cut costs, including likely retrenchments, reported The Daily Post. Tongan born Finau, who replaced former chief executive Joseph Laloyer, is not new to the airline, having served as General Manager Engineering between 2011 and 2014.

He said the airline was facing financial challenges arising from “ambitious decision-making” that pre-dated the pandemic. “In planning for recovery, we will closely examine our present financial position and determine ways to lower cost. This will include reviewing and resizing personnel numbers, property-, plant- and equipment costs, and discarding non-value generating assets that may have some disposal value.”

The size of the workforce should reflect the airline’s reduced operations, he said, which was currently limited to domestic and occasional repatriation flights because of COVID-19. Vanuatu's borders have been closed to international travel since the start of the pandemic in March 2020. “As border restrictions ease and we begin to generate more income, we'll be able to look at gradually increasing employee numbers once more,” he said.

He was also scrutinising decisions made on the choice of aircraft for the fleet renewal and would cooperate with a state-led Commission of Inquiry into decisions made by the former board to purchase four A220s (two A220-100s and two A220-300s). The government wants to reduce the order to two aircraft given the airline’s financial situation. The carrier currently has a fleet of five aircraft, including three DHC-6-300s, one B737-800, and one ATR72-600.

Also under review were Air Vanuatu’s domestic flight operations, including schedules, airfares, and staffing, in line with projections for the re-opening of Vanuatu’s international airspace. “We are reviewing every aspect of the domestic (operation) to see if it is the right schedule, the right airfare, the right people, the right numbers to provide the service,” he said. “We are mindful of when borders will reopen and of areas that need immediate attention.” Other priorities being attended to were on-time performance; adherence to proper schedules; reducing domestic airfares; employment of nationals versus ex-patriates; and safety.

He suggested the government subsidise domestic air transport to mitigate the impact of inflation. “Previously, international operations cross-subsidised unprofitable domestic routes. The lack of international business has fully exposed the economic realities of domestic air transport policies, scheduling, and pricing, he said.