Air Vanuatu files for bankruptcy protection

Air Vanuatu, the national carrier of the Pacific Island nation of Vanuatu filed for bankruptcy protection on Friday, after it canceled all international flights, stranding many tourists. 

Liquidator EY said the airline could be sold to a private operator after it was put into voluntary liquidation by the government on Thursday. Flights to Australia and New Zealand were canceled on Friday.

"All flights have been grounded with immediate effect," a notice on the carrier's website said on Friday.

"We may end up with some kind of sale of the business to a private operator," EY Strategy and Transactions Partner Morgan Kelly said at a press conference in Sydney on Friday.

Operations to be resumed soon

EY and the airline management said they were working to ensure operations were resumed as soon as possible, but did not provide a date.

The carrier operates between the country's islands and to and from Australia, New Zealand, and other South Pacific islands.

The aviation industry has faced recent challenges because of labor shortages and inflation. EY said the tourism in Vanuatu has also been affected due to cyclones.

A statement by EY said the outlook for the airline still remains positive, as it is a "strategically vital national carrier."

Air Vanuatu operates four planes, including one Boeing 737 and three turboprop planes.

About 40% of Vanuatu's GDP comes from tourism. "This is an evolving situation and we will continue to post updates," the Vanuatu Tourism Office said in a statement.

The office's chief executive Adela Issachar said they were in discussions with Virgin Australia and Fiji Airways about flying stranded passengers.

"The updated schedule should be advised soon so we're all looking forward for that," Issachar told Australian Broadcasting Corp.

tg/rc (AP, Reuters)