Corporate doctor called in at Air Australia

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This was published 12 years ago

Corporate doctor called in at Air Australia

By Matt O'Sullivan

AUSTRALIA's newest budget international airline, Air Australia, is working closely with specialists from the advisory arm of corporate paramedic KordaMentha in a bid to turn around its ailing business.

Air Australia confirmed yesterday that specialists from KordaMentha had been working in an advisory capacity for the airline for the past five to six months. The airline has a fleet of six Airbus A320 and one A330 aircraft, which fly domestic routes as well as to Bali, Honolulu and Phuket in Thailand.

The confirmation of KordaMentha's presence at the Brisbane airline follows intense speculation yesterday about its future. The airline is still taking bookings but it declined to respond further yesterday to questions about its financial health.

Air Australia has attempted to turn around its fortunes at a time when the airline industry has been buffeted by high oil prices and intense competition on both domestic and international routes.

The airline is owned by Strategic Aviation Group, whose sole shareholder is its chief executive, Michael James. Before changing its name to Air Australia last year, the commercial airline was known as Strategic Airlines.

After Strategic's charter arm lost a $30 million-a-year Defence contract in 2010, the airline undertook an overhaul aimed at becoming a ''boutique carrier'' in Australia and the Asia-Pacific. The charter arm's main business had been flying Australian troops and military cargo to Kuwait and the United Arab Emirates.

Air Australia and its parent are yet to file accounts for 2011 but statements lodged with the corporate regulator last February show it was under financial pressure. The commercial airline was cash flow positive in 2010 only because it received a loan of more than $6 million from the charter business. More recently, Strategic Aviation has been seeking a cornerstone investor for Air Australia.

Mr James, a 35-year-old former Ansett employee, became Strategic's sole shareholder last February after Melbourne businessman Shaun Aisen severed his ties with both the commercial airline and charter business.

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