CREDITORS OF TRANS ISLAND AIRWAYS MEET

Press, Volume XCVIII, Issue 29058, 21 November 1959, Page 11

CREDITORS OF TRANS ISLAND AIRWAYS MEET

It was disclosed by the acting Official Assignee (Mr K. F. Walker) that Trans Island Airways, Ltd., now in liquidation, has estimated liabilities of £8927 to unsecured creditors. In addition the subscribed capital was £30,000. Causes for the liabilities, given by the company’s secretary- (Mr A. N. Stone) to the first meeting of creditors, were accidents to the company’s two aircraft causing a loss of revenue and shortage of starting capital.

Trans Island Airways owes £11,590 to 66 unsecured creditors, £Bl7 to a secured creditor with the value of the security estimated at £l2OO, £lB5 in holiday pay to employees, two debenture holdings totalling £15,830 and comprising a bank overdraft of £4OOO and a £lO,OOO loan and interest.

Total assets of the company are their two aicraft, both in a damaged condition, and some machinery and spares estimated to be worth £18.668. To unsecured creditors this leaves an estimated deficit of £8927. Added to this is the 30,000 £1 shares distributed.

“The main cause of the insolvency was through accidents to the aircraft, causing a loss in revenue,’’ said Mr Stone. “Basically, though, the shortage of starting capital—£3o,ooo—started the trouble. This went in the purchase of the two aircraft. “Having embarked on a programme of passenger services they had to maintain the high standards set down by the Civil Aviation Authority. And when faced with accident losses they did not have the resources to meet their debts,” said Mr Stone. In 1956 the company’s Beechcraft was purchased from the United States for £16,500, and while in transit it crashed at Brisbane. The total cost of bringing it back up to standard was £9OOO. (

It was in the air for eight months when a crack developed, attributed to the Brisbane crash, in the main spar and the plane was grounded. The cost of repairs was £4500.

In February, 1958, the Lockheed Electra aircraft purchased from the United States for £,16,500, was grounded after a taxi-ing accident, and because of

the state of the company’s finances it was not repaired. Its estimated value now was £lOOO, with a £3OOO accident insurance. The company suffered a loss of £12,000. Mr Stone said that an air passenger service was unlike any other business. In most businesses overhead could be trimmed to turnover.

“Although the company had sufficient ground establishment to maintain three aircraft in the air they were forced to use two pilots, two engineers, and one office staff with wages coming from the one operational aircraft,” he said! “If the company had had sufficient capital the Beechcraft could have been in service in January, 1958. But they were not able to make fullest use of assets.”

On the incoming revenue from one aircraft it was not possible to maintain it in the air every day of the week, said Mr Stone. “We could have maintained all scheduled services on two aircraft.”

The receiver appointed by the bank in May of this year, Mr F. Nicholls, said that the Beechcraft was being repaired and would be sold to Connallan Airways, Ltd., in Alice Springs, Australia. It should realise £12,500. The Lockheed aircraft would have to be sold “as is, where is.” The meeting appointed the official assignee as official liquidator, and a committee of inspection, comprising Mr Stone and the company’s chief engineer (Mr R. M. Buchanan) was set up to assist him. At a meeting later of contributors it was recommended that Mr B. G. Chadwick be added to this committee. The liquidator was given authority to dispose of the company’s assets by private sale.