Thousands stranded as Australian airline goes bust

Martin Parry
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Air Australia flew international routes to Bali, Phuket, Hawaii and domestically

An Air Australia's Airbus A320. Budget carrier Air Australia collapsed Friday, stranding thousands of passengers as its domestic flights and international services to Honolulu, Bali and Phuket were all grounded

Budget carrier Air Australia collapsed Friday, stranding thousands of passengers as its domestic flights and international services to Honolulu, Bali and Phuket were all grounded.

The news came a day after embattled Australian flagcarrier Qantas said it was slashing at least 500 jobs, cutting costs and closing two international routes after posting an 83 percent slump in first-half net profits.

In a statement, the Brisbane-based Air Australia, whose 300 staff have been stood down, said it had appointed KordaMentha as voluntary administrators.

"In the short-term, the fleet will be grounded. It currently appears that there are no funds available to meet operational expenses so flights will be suspended immediately," the administrator said.

"For clarity, it also appears highly unlikely there will be any flights in the short to medium term."

Air Australia flew international routes to the Indonesian island of Bali, Thai holiday paradise Phuket, and Hawaii, and domestically to Brisbane, Melbourne, and Perth, Derby and Port Hedland in Western Australia.

Administrator Mark Korda said up to 4,000 passengers were currently overseas with Air Australia return tickets and advised them to find alternative arrangements.

He told ABC radio the airline was unable to buy fuel at Phuket International Airport on Thursday night, prompting fears about the airline's solvency.

"Air Australia was unable to purchase fuel in Phuket to refuel the planes so the directors had a meeting at 1.30 this morning and appointed us as administrators due to the solvency of the company," Korda said.

"The supplier of the fuel wouldn't grant any further credit to the company."

The carrier, previously known as Strategic Airlines and relaunched in November 2011 to cash in on underserviced routes, flew five Airbus A330-200 and A320-200 aircraft.

Stranded passengers said they were left in the dark.

"There's actually no one at the airport from Air Australia," Wesa Chau, who was waiting for her flight in Phuket, told Australian media.

"They offered no assistance whatsoever."

The collapse came as a Thai flight attendant told ABC the carrier was paying her far below the Australian minimum wage with Workplace Relations Minister Bill Shorten saying he was very concerned by the allegations.

"If they are doing domestic sectors in Australia that is not on and I will be contacting the Fair Work Ombudsman... they should make some contact with my office and we'll get on top of that," he said.

Korda said he was hoping to find investors to save the airline.

"Hopefully we can find a white knight, if not the operations will stay suspended and then what we'll do is we'll follow up with everybody about how did this all happen?," he said.

Qantas chief Alan Joyce, whose own airline has been hit hard by soaring fuel costs and a fleet grounding last year due to labour disputes, said he would do what he could to help stranded passengers.

Jetstar, Virgin Australia and Hawaiian Airlines also said they would help, while Prime Minister Julia Gillard demanded administrators do all they could to aid passengers and staff.

"I want to say to the administrators, they need to do everything they can to ensure that these people who have been passengers with this airline get back home," she said.

"I do want to see maximum support for those Australians who have been stranded ... and of course we want to see them deal with their workforce properly."