While the wave of post-pandemic travel demand is still going strong, not all airlines are benefiting when it comes to finances. In the U.S., bankruptcy risk rumors around Spirit Airlines (SAVE) have been swirling in the air ever since a federal judge blocked JetBlue (JBLU) 's plan to acquire it for $3.6 billion and "save" it from a string of unprofitable quarters.
Globally, airlines such as Canada's Cascadia Air, Norway's Flyr, the United Kingdom's Flybe, Mexico's Aeromar and India's GoFirst have all filed for bankruptcy in 2023. Newly-launched budget airlines are at particular risk due to the high costs around starting and keeping a carrier profitable without the reputation among customers that established airlines have.
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A small nation of 13 islands in the South Pacific Islands, Vanuatu is home to just over 326,000 people and has only one airline that is also its national carrier: Air Vanuatu. Often used to shuttle residents and tourists from cities in nearby Australia and New Zealand, Air Vanuatu is vitally important to those with ties to the extremely remote country — there are only so many ways to get to the island nation.
Airline filing for bankruptcy is a 'strategically important business to the nation'
But amid the low numbers of people flying to Vanuatu overall, the carrier has run into financial problems. On May 10, Air Vanuatu canceled all of its international flights (the country is too small to run domestic flights so this essentially means all of its flights) and announced that it was filing for bankruptcy protection after struggling to find the cash to do the "extended maintenance requirements" required for the four planes currently in its fleet.
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The liquidators assigned to work on the bankruptcy said they would do everything possible to ensure that Air Vanuatu could continue operating and the people of Vanuatu would not be left without an airline. The existing executive and management teams will also stay in place as liquidators work out a financial strategy for the airline going forward alongside the Vanuatu government.
"Air Vanuatu is critical to the people of the Republic of Vanuatu and a strategically important business to the nation," Morgan Kelly, an Ernst & Young partner and one of the liquidators assigned to the bankruptcy, said in a statement. "... The outlook for the airline is positive, despite pressures on the broader industry, and we will be focused on securing the future of this strategically vital national carrier."
But in the current moment, thousands of travelers slated to fly to or from Vanuatu were left stranded as the airline canceled all of its flights with only a few hours' notice.
"If you are due to fly with Air Vanuatu, please DO NOT TRAVEL TO THE AIRPORT unless you have arranged an alternative flight with another airline," Air Vanuatu's website currently reads. "Please note that Air Vanuatu is unfortunately not able to arrange alternative flights for passengers at this stage."
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Other airlines currently offering flights to Vanuatu include flagship Australian carrier Qantas Airways (QUBSF) , Fiji Airways, Singapore Airlines (SINGY) and Qatar Airways — all of which struggled with a rush of travelers looking to book any available seat on what are already infrequent flights to and from the island country last week.
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