SIR DENNIS BUCHANAN OFFERS TO BUY BACK VANAIR

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By Marc Neil-Jones

PORT VILA, Vanuatu (April 27, 2000 - Vanuatu Trading Post/PINA Nius Online)---Sir Dennis Buchanan, the retired entrepreneur who now lives in Vanuatu, is interested in putting together a consortium of local shareholders to make a bid for Vanair, the government owned airline.

Sir Dennis, in the 1980s, had the biggest third level group of airlines in the world, owning Talair in PNG with a fleet of 100 aircraft, Solair in the Solomons and Air Melanesie in Vanuatu.

After confrontations with the Lini government in 1989 over a decision to nationalize Air Melanesie and after problems with obtaining a work permit for a family member who was chief pilot and married to Sir Dennis' daughter who was the General Manager of Air Melanesie, he left Vanuatu abruptly towards the end of 1989.

Sir Dennis advised Trading Post, "We were very unhappy at the time because the government suddenly said they were going to nationalize the airline and take us over on January 1 of 1990 without any negotiation on the matter, so I decided we would leave before then. I had built up the airline since joining them in 1978 and was running a good service here. I had gone through a nasty time with the Solomons government and had lost money when they nationalized Solair in 1987, and I didn't want to go through the same problems with the Vanuatu government."

Buchanan wants to know if the government is serious about opening up the airline industry and says, "When Air Melanesie was operating, about 5% of the company was owned by between 400-500 local shareholders who were landowners and villages that we had given shares in the airline to in exchange for landing strips in the islands. When we left Vanuatu after selling the assets to the government for $500,000, we paid off all the shareholders and they were unhappy that we were leaving. They wanted us to stay, but people were putting pressure on the government to get rid of us. We would ask them to become shareholders again and invite other interested Ni-Vanuatu investors to become shareholders, including the government if they want."

Ken Hutton, a long term resident of Vanuatu who has extensive knowledge of the airline industry, having been involved in setting up Air Melanesie and serving on the board of the company for years, believes Sir Dennis would turn both Vanair and Air Vanuatu around into profitable airlines.

He said: "Who else in the region has the knowledge and experience that he has? He could bring in better planes and improve the service. He has serious money behind him and a successful airline in Australia with Flight West, which is negotiating to extend its service into New Caledonia through its tie up with Ansett and Air New Zealand. It would be great for Vanuatu to open the airlines up to serious competition or to privatize them."

Sir Dennis, who is 67 years old, says he is serious in his offer to take over the airline. He advised: "I retired to live here in 1994 and my family runs the business in Australia. I am bored and am twiddling my thumbs here doing very little. I have heard Vanair and Air Vanuatu have financial problems and I know what is needed to turn them around. We have the money.

"This government keeps saying they want to attract investment and to open up to competition in the airline industry and I am very interested, but I want to know whether they are serious or not or whether they are saying things they don't mean for window dressing to their voters."

Both Buchanan and Hutton believe that the government is not really serious in opening up the airline industry and privatizing the airline. They are very suspicious of Dinh Van Than's involvement and plans saying, "We think he is gearing up to try and take over the airline himself at a rock bottom price. He wants an airline here and he tried already with Dovair, which failed. He is bringing in bigger planes for his Air Tropicanan and we would be surprised if he wasn't interested in Vanuatu."

Buchanan says that Vanair have done reasonably well because the government was given Air Melanesie on a plate for next to nothing in 1989. "I gave them the infrastructure -- planes, a business with a positive cash flow. I sold them the assets, excluding the turbo prop planes, for half a million dollars, which is nothing for an established airline. How could they fail? Vanair could only grow. We gave them a very good deal. Now we are happy to make them a good offer, after we have done due diligence, and if the government wants to keep a small share holding that can be negotiated."

He has also said that if the government doesn't want to sell him Vanair or Air Vanuatu he would look at setting up a competitive airline in line with government policies to improve service, open up investment and allow competition, provided the government allowed him to operate freely.

Buchanan's offer was made following reports of cash flow problems at Vanair. The airline is advertising its oldest Twin Otter Victor 1 for sale in Australia for around $1.2-1.4 million dollars. Reports are also circulating that although the Dash 8 aircraft is doing well it is reducing passenger traffic on the other aircraft. In addition, two expatriate engineers have recently left and have not as yet been replaced.

Acting General Manage for Vanair Leo Tamata says that after nine months of Dash 8 operations the management is happy with its performance and reliability. He advised that "when the Dash 8 project was established, the company also planned to sell one Twin Otter aircraft after 6 months of operation if the Dash 8 operation proved profitable.

He advised, "The Dash 8 will soon be able to land at Norsup in Malekula and the company is looking forward to flying from Tanna to New Caledonia before the end of the year."

Buchanan is serious and has money. It remains to be seen if the government is serious and if it and Dinh Van Than will react positively to this very positive news that Buchanan is once again interested in reinvesting heavily in an airline in Vanuatu with Ni Vanuatu shareholders, despite the government's forced nationalization of his company a decade ago.

Pacific Islands News Association (PINA) Website: http://www.pinanius.org 

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