City of Karratha

JetGo Australia placed into Liquidation

05 Jul 2018

  • JetGo Australia Holdings (JetGo) placed into Liquidation by the Supreme Court of New South Wales
  • City of Karratha listed as Creditor and will seek refund of sponsorship payments
  • Passengers who had booked flights on their credit card are urged to contact their financial institution to seek reimbursement of the ticket price
  • Council remains committed to growing international and domestic services from Karratha Airport

JetGo Liquidation - FAQ

International and interstate route development has long been a priority for City of Karratha residents. The City Council has been working hard to facilitate the provision of additional services from Karratha Airport.  In 2016 the City undertook an expression of interest and a tender process to identify and select a provider to operate international flights to and from Karratha Airport. Despite some interest, there were no formal bids received to operate these services. Negotiations did progress with an airline but they did not prove fruitful as the airline operator elected to pull their support for the proposal prior to any agreement being reached.

In June 2017 the City was approached by JetGo regarding the potential to operate regular air services from Karratha to Brisbane and Singapore. These discussions and negotiations progressed and in December 2017 the City signed a sponsorship agreement with JetGo Australia to provide direct flights from Karratha to Brisbane and Singapore. The sponsorship agreement required upfront installments to secure a plane for the service, then profit/loss share arrangements once the service was in operation.

Prior to signing the JetGo Sponsorship Agreement, the City undertook a detailed review of JetGo’s financial performance and carried out number of independent risk assessments on the Airline and the sponsorship proposal. This included an independent credit check, review of JetGo’s financial statements for the previous five years and a financial risk assessment of the company. Based on the information and outcomes of these reviews, the City understood that JetGo’s financial position was sound. 

At the beginning of May, the City was made aware that JetGo’s financial position had deteriorated and the company was having cash flow issues. The City was advised by JetGo that this was due to failure of an international investor making payments. As a result of this advice, the City immediately suspended sponsorship payments to JetGo. At that time, City officers requested additional information from the company regarding its finances and its plans to attain financial sustainability. The information provided to the City indicated that the company was in significant financial stress. Despite this, JetGo’s management indicated that they were optimistic about the ability to recover from the financial position that they were in.  

McLeod and Partners were voluntarily appointed by JetGo Australia on the 1st of June to undertake an Administration process. City of Karratha officers worked closely with JetGo and its Administrators throughout this process as options to recapitalise and restructure the company were explored. Unfortunately, negotiations with potential investors have not resulted in JetGo being able to trade its way out of Administration. The Administrator’s assessment indicates that the company was in a worse financial state than the City understood to be the case.

Today, Thursday 5th July, JetGo Australia was placed into Liquidation by the Supreme Court of New South Wales.

The City has registered as a Creditor with the JetGo Administrators, along with a number of other local governments, airports and financiers.  Under the terms of the City’s Sponsorship agreement, all payments to JetGo are to be fully refunded to the City if the services do not commence, however, the Administrator has advised that if JetGo does go into Liquidation that the City is unlikely to recoup any costs as the City is not a secured creditor.

To date, the City has paid $848,763 in sponsorship installments to JetGo to enable the company to prepare for the commencement of the new service including pilot training, recruitment, progressing regulatory approvals, aircraft leasing, fit out and livery. The City has evidence to demonstrate that its payments were spent on these activities. The sponsorship payments were budgeted for by Council in the 2017/18 Annual Budget. A decision to wind up the company will not have an impact on the City’s current budget or property rates into the future.

All passengers who had booked flights with JetGo have been advised that the services have been cancelled. The Administrator has further advised each ticket holder is also listed as a Creditor. Passengers who had booked flights on their credit card are urged to contact their financial institution to seek reimbursement of the ticket price.

While this has certainly impacted on the City’s aspiration to grow international and domestic services, Council remains committed to improving connectivity and travel options from Karratha Airport.

Comments attributed City of Karratha Deputy Mayor, Grant Cucel:

“International and interstate route development has long been a priority for City of Karratha residents and Council has been working hard to facilitate the provision of additional services from Karratha Airport.”

“While today’s announcement is a blow to our aspirations to grow domestic and international services, Council remains 100% committed to improving connectivity and travel options from Karratha.”

“We will continue to work with JetGo’s Administrators and the appointed Liquidation Officer to pursue our options to recoup any costs incurred but we have been advised that this may be unlikely. Costs incurred in trying to facilitate these services will not impact property rates or future budgets.”