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Air Vanuatu liquidation prompts Virgin flight boost

Air Vanuatu has entered voluntary liquidation, prompting Virgin Australia to increase its flights to the Pacific nation.

EY Australia's Morgan Kelly, Justin Walsh and Andrew Hanson were appointed as liquidators for the airline on Friday.

The Pacific nation's carrier cancelled more than 20 flights to and from Sydney, Brisbane and Auckland for the rest of the week on Wednesday.

This was attributed to the result of "extended maintenance requirements" on their aircraft.

EY said it would conduct safety and maintenance checks before the resumption of normal operations.

Mr Kelly, partner in strategy and transactions, said the airline's existing management team would remain in place throughout the process.

"Air Vanuatu is critical to the people of the Republic of Vanuatu and a strategically important business to the nation," he said.

"The outlook for the airline is positive, despite pressures on the broader industry, and we will be focused on securing the future of this strategically vital national carrier."

Mr Kelly said Air Vanuatu has been impacted by labour shortages, rising operating costs, elevated interest rates and tropical cyclones on tourist numbers in recent years.

The airline was looking at all options and the Vanuatu government indicated they would prefer it to resume operations as quickly as possible, he said.

"Our role as voluntary liquidators will be ... to assess all options to achieve that and make that sustainable," Mr Kelly told reporters.

"So that might involve some kind of sale process, it may involve some kind of partnership arrangement with another airline."

Affected travellers would be informed of the disruption and re-booked on flights as soon as operations resumed, EY said.

Virgin Australia is the only other Australian airline to operate into Vanuatu.

The airline confirmed on Friday afternoon it would increase its services between Brisbane and Vanuatu by two flights per week, to five per week, at the government's request.

Those flights would continue for the rest of May and June, a Virgin Australia spokeswoman said.

"Virgin Australia has ... applied to the International Air Services Commission to increase our allocation of seat capacity between Australia and Vanuatu, with plans to quickly commence a further seven weekly services from east coast gateways into Vanuatu, supporting continued connectivity with our Pacific neighbours," the spokeswoman said.

Air Vanuatu has been teetering on the edge of financial ruin after reports the Vanuatu government appointed EY to advise the government.

It operates four planes, including one Boeing 737 and three turboprop planes.

The Vanuatu Tourism Office said it was aware of reports Air Vanuatu had entered voluntary administration and apologised on behalf of its tourism industry.

"Virgin Australia has ...applied to the International Air Services Commission to increase our allocation of seat capacity between Australia and Vanuatu, with plans to quickly commence a further seven weekly services from east coast gateways into Vanuatu, supporting continued connectivity with our Pacific neighbours," the spokeswoman said.

Qantas said it was supporting customers impacted by the cancellations to find alternative flights.

It also encouraged any customers with bookings on Air Vanuatu between now and the end of May to contact their flight provider for refunds.

with Associated Press

Holly Hales and Cassandra Morgan - AAP

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