Embattled regional airline JetGo has informed its staff that the company has been “experiencing a critical shortage of cash” for some time.
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In an email, provided to the Mercury, the airline’s management announced it brought in corporate advisors last Friday to restructure its finances.
Further confirmation of money troubles comes just days after the Mercury revealed efforts were underway from Dubbo Regional Council to wind up the airline due to an unpaid debt.
The western NSW council says the company owes $271,000 relating to passenger taxes, with a court date set down for next month.
If successful, this legal action would have widespread ramifications across regional Australia – including the Illawarra’s flights to Melbourne and Brisbane – where JetGo operates domestic flight services.
However, the airline says it has a plan to recapitalise for the benefit of investors, staff and creditors by the end of the financial year.
According to JetGo, the cash shortage was caused by payments from a investor falling through, as well as unexpected maintenance costs and delays in bringing two new aircraft into service.
“The cash shortage has resulted in JetGo currently only operating two of its five aircraft,” the email said.
“This situation needs to be rapidly addressed.”
To fix this problem, the company has appointed corporate advisers The Investment Collective to restructure the financial management of the business and to co-ordinate investors.
”The Investment Collective is experienced in working with distressed companies and companies undergoing restructure and has a successful track record,” the company said.
By June 30, JetGo aims to “have the entire company recapitalised and operating on a known and viable financial footing”.
Two new aircraft will be operational in the coming weeks, management said, and said more investors were already working with the company.
”This process will offer a much better outcome for our staff, creditors, shareholders and many other stakeholders,” the email said.
“Already this week we have made good progress. JetGo’s problems are very repairable, and we believe can be achieved in a reasonable timeframe.”
JetGo’s managing director Paul Bredereck confirmed business advisors had been appointed and said there had been a number of internal emails about changes within the company sent to staff last week.
He and CEO Jason Ryder would not answer further questions or say whether the money troubles would have an affect on regional flight timetables.