Air Australia and total media FAIL Plane Talking included
The disclosure today at the creditors meeting that Air Australia had debts of up to $90 million and only $440,000 in cash when it went bust is a huge embarrassment to the media, including Plane Talking.
There are a number of general media stories in circulation, but no apologies for a lack of forensic reporting prior to this disaster.
My excuse. I thought Michael James was struggling to score nil in terms of public profile and relevance and thus didn’t merit media oxygen, I didn’t want to bag a battler, and I made sure I refused all invitations for free flights and parties, including a Christmas shopping trip to Honolulu when those flights began in December.
It’s a poor excuse. The time to have gone in hard was the rebranding of the carrier from Strategic to Air Australia, and the next opportunity was the withdrawal of insolvency insurance at the end of November, which I did report and pursue, as did The Australian, and which then went further at the end of December by revealing that James had approached a convicted criminal, Geoffrey Edelsten, to be a white knight and put up some money, which must have been an act of desperation to keep the operation on life support.
But that seemed to be the extent of media probing. Some good work done too late.
The only way the media could consider itself successful in relation to Air Australia would have been to have accelerated its failure, and prevented some of the losses it inflicted on the gullible or trusting, whichever term you prefer.
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Does the $90 mill include a big chunk of airplane lease payments to end of contract.
It seems too high for such a small airline compared to other bankruptcies in this business – there have been quite a few.
by ghostwhowalksnz on Mar 1, 2012 at 9:52 am
SkyAirWorld was a similar size and went under owing a similar amount…
by Magoo on Mar 1, 2012 at 1:36 pm
Ben,
I actually think you erred on the right side of caution.
The real question is who are these debts to. Most passengers can afford the uncomfortable loss of a fare. I just hope AA doesn’t take down other otherwise sustainable businesses with it. We definately need some form of escrow for worker’s entitlements, so that the company can still earn interest etc on provisions but workers entitlements are protected.
At least we don’t have Chapter 11 revolving door bankruptcy here. It punishes the legitmate suppliers and rewards unsustainable opertors.
by Zarathrusta on Mar 1, 2012 at 2:58 pm
Ben – Arn’t you being a bit hard on your media colleagues? What I hate are media beat ups that cause concern and then the collapse. Wow! An electrical retailer has just gone the same way and the receiver has announced that the millions of dollars in gift cards out there are worthless. Because it is not an airline no-one knew until it was announced. Those of us who are airline watchers have been telling their friends for months not to touch Air Australia. I guess retail watchers are doing the same thing with Harvey Norman at the moment.
by Geoff on Mar 1, 2012 at 5:28 pm
I notice in regard to Sky Air World Pty Ltd the major creditor is described in news.com.au
“Mr Allen provided nearly $22 million in seed loans for the airline and is the only secured creditor, although his valid charge could amount to just $105,000.”
Unfortunately documents with ASIC have to be paid for to view online
When everything is leased , future lease costs can add up very quickly but are hardly ‘unpaid’ in the sense of services all ready provided.
by ghostwhowalksnz on Mar 2, 2012 at 8:18 am