In theory, Bonza tried to deliver what all Australians crave. Cheap connectivity and choice so readily enjoyed by the bulk of the world in countries far smaller than ours. But there are reasons transport – by car, air, bus or train – tends to be more expensive in this country than its global peers. The country’s higher labour, fuel and maintenance costs mean the budget airline model is by far the most maligned, with Jetstar the only low-cost carrier that has been able to go the distance, thanks to the backing of its margin-fat parent airline Qantas, which controls 60 per cent of the market.

A flying start

When Tim Jordan started pitching his idea for a no-frills airline to service regional leisure travellers with an average ticket price of $100 in 2017, the Bonza founder and chief executive originally wanted to fly 72-seat, twin-engine turboprop planes twice a week and get about $50 in revenue per passenger. No local investors were interested.

Miami-based private equity firm 777 Partners agreed to fund Bonza three years later after benefiting from its stake in a similar Canadian airline, Flair, at the onset of the COVID-19 pandemic, and secured long leases for six Boeing 737 Max-8 aircraft.

The Max-8 can sit up to 210 people, depending on the configuration, and is generally used for services between major domestic destinations such as the “Golden Triangle” of Sydney, Melbourne and Brisbane in the case of Virgin Australia, or short-haul international routes. The aircraft type is in hot demand worldwide as Boeing’s order timeframes continue to blow out due to issues with its Max-9 and 10 models, and other manufacturing delays due to COVID-19.

On the surface, it seemed Bonza was beating expectations despite cutting a number of routes. Many had anticipated it would fold within six months given its minuscule margins could not possibly keep up with the inflated cost of fuel that dominated much of last year.

Despite, at times, patchy reliability, routes such as the Sunshine Coast to Newcastle were regularly packed full of eager tourists ready to boost local tourism revenue.

Beginning of the end

But below the jocular press releases and grateful regional communities were signs the airline was beginning to come unstuck. Jordan initially said Bonza would need at least 10 aircraft to break even, but battled fleet issues from the beginning as 777 Partners redirected one of its Max-8s to Flair soon after launching.

It also ran into trouble at the end of last year after attempting to borrow a second aircraft from Flair. A lack of regulatory approval forced the plane to then sit idle at Sunshine Coast Airport for months, disrupting the travel plans of thousands.

In April, Bonza stopped paying its aircraft leases. Two weeks later, it all came crashing down.

Jordan said Bonza and 777 Partners were blindsided when it was forced to ground the airline following AIP Capital’s attempt to seize its fleet. But there were signs of trouble months earlier.

Behind the scenes

Disclosures to the corporate regulator from Hall Chadwick reveal the administrator held meetings with 777 Partners former head of airline partnerships Manish Raniga, who sought advice on the state of Bonza at least nine times between November 2023 and April.

The Australian Financial Review obtained an email sent in March that revealed 777 Partners, its financier A-Cap and Bonza chief financial officer Lidia Valenzuela knew there was a plan emerging to shut down Bonza’s operations.

“We’ll need to revisit in one week to keep them calm, but this should help. We are moving full speed ahead to get the planes out of there ASAP and wind this up,” the email detailing Bonza’s debts from AIP’s Jared Ailstock to AIP executives Kenneth King and Carson McGuffin on March 22 reads.

This email was then forwarded by 777 Partners’s Kevin Burgos to Valenzuela in an attempt to reassure her the aircraft leases had been paid on March 27. Instead, it sent the carrier’s executives into turmoil.

Within a fortnight, Bonza received four notices of default for its leases. Two of them were signed by 777 cofounder Joshua Wander, and the two remaining were signed by AIP Capital general counsel Greg Kahn. Bonza’s lenders then engaged restructuring firm KordaMentha for advice on what to do, but the airline has always denied any role in this engagement.

Sources close to Bonza’s executive who have spoken to this masthead on the condition of anonymity said it was 777 Partners’ job to pay its aircraft lessor, AIP Capital. They feel the private equity group did not act in the airline’s best interest. But Bonza did continue to sell tickets until the morning its planes were seized.

The eleventh hour

Bonza’s administrators told some of its 60,000 creditors on Friday that there were “very interested parties” in the airline, and they remained hopeful of a last-minute buyout. All up, the airline owes more than $100 million in debts to staff, ground handlers, airports, and passengers. It owes 777 Partners $80 million, according to Hall Chadwick. It won’t be clear until early next week whether it’s been saved, but most industry insiders aren’t holding their breath.

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It’s easy to look at the margins of giant airlines such as Qantas, Delta, and United and say the industry has recovered from the decimation of COVID-19. But the airline industry is as cutthroat as it gets, and as the global manufacturing and staffing shortage becomes more entrenched, smaller airlines all over the world are suffering.

Bonza may be the only airline to have aircraft dubbed Bruce and Shazza, but it’s far from alone in failing to stay airborne.

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