Around $1.7 million is owed in outstanding debts, including $110,000 in employee wages, and $1.4m to many Cairns-based creditors. Regional Pacific operated daily return services between Cairns and Bamaga, serving the North Peninsula Area of Cape York.
Terry van der Velde and Terry Rose have been appointed administrators, and are hopeful the business can recommence operations again.
"Trading activities have been grounded, but we are looking at recommencing that," Terry Rose told CairnsBlog. "We are still going through the cash flows to ensure that we can do this."
A deed of company arrangement is being prepared, for many Cairns-based businesses that should see all creditors paid in full by the end of September.
"It's probably a little bit too early to provide much detail on this," Terry Rose said. "We've been in contact with creditors, and then we can make an assessment. We are looking at keeping the company afloat; a deed [with creditors]; and get the operations going quickly."
de Jonge, Read and Associates have been engaged to help restructure the airline's business with chief executive Anthony Sandford agreeing to pay all creditors owed. Regional Pacific went into administration last week, when cash flows reduced to a serious state. Around 10 staff have been laid off.
The airline needs to maintain employee wages to retain their Aircraft Operators certificate, their only real asset. In a letter to creditors, de Jonge says that even if they had additional funds in which to pay some creditors, they don't have enough to pay all, and therefore we would be concerned that if a creditor was determined to liquidate the company, any payments made now may be considered as preferential and be recalled by a liquidator."
"We are seeking [creditors] ongoing co-operation and support and request that no undue pressure for payment be undertaken. This will allow for negotiations to be completed with a successful commercial outcome for all concerned," de Jonge said.
Cairns Regional Mayor Val Schier told CairnsBlog it's always disappointed to hear of a business going under, particularly in this economic climate.
"I hope that an alternative airline will be able to pick up that route as quickly as possible, to ensure that the Northern Peninsula people have a connection with Cairns." she said.As recently as November last year Regional Pacific added additional flights between Cairns, Mt Isa and Alice Springs. Chief executive Anthony Sandford said at the time that they were responding to key customers’ operational requirements. “Customising our service enables us to deliver a higher level of service.”
Regional Pacific also offered private charter nationally, however these services, along with the Mt Isa and Alice Springs routes, were cut when cash flow slowed down considerably over recent months. They operated a small fleet of two Embraer EMB 120ER Brasilia aircraft.
Skytrans is now the only remaining airline servicing Cape York's Northern Peninsula Area , and last week increased flights as a result of Regional Pacific's demise. Return flights from Cairns cost between $750 and $1,000. Qantas flies to Horn Island, for a similar price.