BONZA: Private equity firm takes jet away

Bonza, Australia’s newest airline has lost one of its Boeing 737 Max aircraft. VH-UDV is its registration number in Australia. By lost, I mean that the airline’s backer, private equity outfit 777 Partners has re-assigned the aircraft to Flair Airlines. Financier 777 Capital Partners is also the private equity firm behind Bonza Airlines.

Penned by Lucas Baird, the AFR story records the redirection as resulting from a shortage of aircraft at Flair Airlines. The repossession of 4 of Flair’s aircraft for non-payment of leasing fees has caused the shortage . Aircraft leasing company Airborne Capital alleges that Flair didn’t pay its leasing fees on time racking up a big debt. Of course, Flair disputes some of the details of the allegations, which will probably end up in court. The problem for Flair Airlines was being four aircraft down, and having to cancel numerous flights. 777 Capital Partners, has decided that Fliar needs the aircraft more than Bonza. ,

both being airline investments of the private equity firm and has re-assigned the plane.

Will this affect Bonza Airlines?

Private Equity tends to back what is best for them. The decision to re-assign the plane helps protect their larger investment which is with the Canadian operator Flair. Bonza has only been operating since January, so being one plane down might slow their development, but won’t be catastrophic.

Bonza leases two 737 MAXs from the leasing wing of 777 Capital Partners and not from Airborne Capital, currently in dispute with Flair.

Legal suits at 20 paces

Airborne Capital is after the outstanding lease payments, alleged to be in the millions. Flair is suing Airborne Capital over the repossession.

2PAXfly Takeout

I suppose this demonstrates how much power private capital and new airline funders have over the enterprises they finance. Being able to reassign aircraft between airlines independent of their boards, is a pretty good power to have. But it helps if you also own the leasing company your funded companies use.

Will this impede the progress of Bonza Airlines here in Australia? Probably not. Originally scheduled to fly in the second half of 2022, Bonza’s aircraft arrival schedule may have been designed for that start date. The airline, due to underestimating the regulatory approval process timeline, didn’t get off the ground until January 2023. That 6-month delay might mean that losing one plane for a while is not a problem.

Bonza’s executives have pretty bold plans, the boldest of which is to make the airline profitable within two years.

Time will tell.