Funds injection for Southern Air

Press, 5 December 1983, Page 33

Funds injection for Southern Air

PA Invercargill The financially troubled Southern Air, Limited, the only airline serving Stewart Island, is to be restructured. Receivers for the airline, Mr 0. C. Pierce and Mr D. E. Mitchell, say agreement has been reached between the debenture holders, the Development Finance Corporation, and four Southern Air directors who have undertaken to inject substantial funds to maintain the company’s operation. Mr Pierce says that Southern Air is in serious financial difficulties caused largely by big losses on the operation of its Nomad air-

craft. Since the appointment of the receivers in March, this has been sold to Australian interests.

Recently the company has been using a Britten Norman Islander aircraft on the Stewart Island run, with back-up for its Dunedin service from a Piper Aztec. It is apparent this operation will not recoup the earlier losses, Mr Pierce says.

The proposed restructuring will enable Southern Air to operate an improved service for Stewart Island as well as continue the Dunedin-Invercargill operation, he says.

Southern Air, formerly Stewart Island Air Services, in 1976 took over the amphibian run to the island started in the 1950 s by the Mount Cook group. The commuter airline extended its operations in April, 1980, when it started scheduled flights to Dunedin.

Southern Air was launched with a nominal capital value of $lO,OOO in 1976. In 1981, the authorised share capital stood at $112,000 and on August 13 that year the company agreed to increase its capital to $200,000 with the assistance of funding from the DFC.