Creditors seize Nauru's only passenger jet

Air Nauru 737-400. File picture / Kenny Rodger

MELBOURNE - Air Nauru is frantically trying to secure another aircraft, after the tiny nation's only passenger jet was repossessed by creditors yesterday.

Air Nauru chief executive officer Geoff Bowman said today the United States repossessed the government-owned aircraft yesterday morning at Melbourne Airport for non-payment of finance instalments.

"Well it was repossessed yesterday. The requirement for the court was that it be delivered to Melbourne by 10.15am yesterday, which we did," said Mr Bowman.

The Boeing 737-400 operated by Air Nauru was the island's only regular link with the outside world, and was surrendered to a trustee for the Export-Import Bank of the United States (Ex-Im Bank).

It followed an adverse decision in the High Court, in Melbourne, on Friday which refused to grant Nauru special leave to appeal against a Victorian Court of Appeal decision directing that the aircraft be handed over.

Washington-based Ex-Im Bank was the official export credit agency of the United States and helped finance the sale of US exports, primarily to emerging markets.

Mr Bowman said the airline was trying to secure another passenger jet or find a carrier to take over its routes.

"We're looking at other carriers to do the flights or take over the routes on our behalf until we can sort things out," he said.

"We've been seeking that solution over the weekend and we'll be seeking it again today."

Until the airline can resolve the problem, Nauru residents remain stranded with no flights in or out of the island.

Mr Bowman said until now the airline had regular flights to Brisbane on Tuesdays and Thursdays, as well as other flights to destinations in the South Pacific.

"We've got flight requirements this week to Brisbane, Fiji and Honiara (Solomon Islands), so there's a mixture we have to service."

In a statement released on the weekend, Ex-Im Bank said it appreciated the difficulties that the court's decision presented to Air Nauru and the Government of Nauru.

"However, this action follows numerous unsuccessful attempts to negotiate a resolution and is now unavoidable in order to protect the interests of US taxpayers," the statement said.

Nauru, a 21sq km Pacific island with 7500 residents, was once per capita one of the wealthiest nations on earth, courtesy of seabirds whose droppings were mined and exported throughout the world as fertiliser.

Now the phosphate is almost gone and the vast wealth it produced has all but disappeared through dubious investments, mismanagement, waste and corruption.

Nauru's latest problem dates back to May 2002 when it became unable to meet finance instalments to Ex-Im Bank which sought orders in the Supreme Court of Victoria for foreclosure and repossession of the jet.

Nauru, through its aircraft operator Victoria Aircraft Leasing, never disputed its failure to pay.

Rather, the High Court heard, it claimed that the US had promised support to Nauru in relation to aircraft financing in return for Nauru's co-operation in assisting the US to gather foreign intelligence and protect its national security.

It further claimed that Ex-Im Bank could not take possession of the aircraft, or foreclose on it, because of representations made by the US during those dealings.

Nauru also sought to drag the US directly into the litigation. The US argued immunity from the jurisdiction of Australian courts.

Nauru's final bid to keep its aircraft failed in a briefing hearing before the High Court in Melbourne on Friday.

Had they succeeded, repossession could have been deferred for a number of years and perhaps forever if they had won the case.

The court refused. As is usual with applications for special leave, the court gave no reasons.

- AAP