The operator of the Spirit of Tasmania has come under scrutiny after Tasmania’s Auditor-General declared the business insolvent. According to a recent audit, Spirit of Tasmania operator was ‘insolvent,’ audit says, but the TT-Line board vehemently disagrees with this assessment. The disagreement centers around the company’s capacity to meet its long-term debt obligations, despite a substantial increase in its borrowing capacity.
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Official guidance: USA.gov — official guidance for Spirit of Tasmania operator was ‘insolvent,’ audit says, but
Main Points
Tasmania’s Auditor-General, Michael Thompson, released a report raising serious concerns about the financial viability of TT-Line, the state-owned entity responsible for operating the Spirit of Tasmania ferries. The report, which assessed the financial statements of various state entities, highlighted the challenges facing TT-Line and the Motor Accidents Insurance Board (MAIB). The Auditor-General’s assessment indicated that the Spirit of Tasmania operator was ‘insolvent,’ audit says, but this conclusion is contested by the company’s board.
The assessment was conducted after TT-Line’s borrowing limit was increased significantly, from $990 million to $1.4 billion, but before the government injected $75 million in equity. Despite the increased borrowing capacity, the report suggested that while TT-Line could meet its short-term debts, its long-term financial stability was in question. The Auditor-General stated, “I developed reasonable grounds to suspect that the company would not be able to meet its longer-term debts that fall due after the relevant period.” The formal audit report, issued on August 19, 2025, stated that, in the Auditor-General’s opinion, the Spirit of Tasmania operator was ‘insolvent,’ audit says, because it had incurred debt that it did not have the ability to repay.
TT-Line’s Financial Trajectory and New Corporate Plan
Over the past four years, TT-Line’s financial performance has deteriorated significantly. The company has transitioned from a $4.2 million underlying profit to a $24 million loss. Furthermore, TT-Line provided no returns to the government in the past financial year. Passenger numbers have also seen a decline, decreasing by 4.9 percent. These financial challenges have coincided with the final stages of the ferry replacement program, which has been plagued by scandals. Both new vessels are expected to commence operations in October of the following year. The Spirit of Tasmania operator was ‘insolvent,’ audit says, and these issues have led to major changes within the board and management, including the withdrawal of the existing corporate plan.
In response to these financial pressures, TT-Line is developing a new corporate plan, which is expected to be presented to the government in the coming months. This plan will outline a range of options aimed at addressing the company’s long-term financial problems. Despite the increased debt capacity, TT-Line has not yet drawn down on the additional $400 million. The company’s future financial health hinges on the success of this new corporate plan and its ability to navigate the challenges posed by declining passenger numbers and increasing debt. The goal is to ensure the Spirit of Tasmania operator was ‘insolvent,’ audit says, and that this situation can be rectified.
Board’s Disagreement and Confidence in Assets
The TT-Line board has strongly disputed the Auditor-General’s assessment of insolvency. Chair Ken Kanofski stated that the board “remains confident of its position.” He emphasized that TT-Line has almost fully paid for the new ships and possesses more assets than liabilities. According to Kanofski, the directors and management, with the assistance of specialist advisors, are actively working on developing financially sustainable options for the government to consider. This disagreement highlights the differing perspectives on the company’s financial health, with the board focusing on asset value and future strategies, while the Auditor-General emphasizes the immediate ability to repay debts. The Spirit of Tasmania operator was ‘insolvent,’ audit says, but the board’s perspective offers a contrasting view.
The board’s confidence also stems from the expectation that shareholders, including a shareholder minister, will approve an equity injection and, if necessary, asset sales and a restructure. TT-Line anticipates selling Spirit of Tasmania I and II once the new vessels are operational. These vessels were valued at $85 million in the latest annual report. A restructure could also be integrated into the revised corporate plan. During a parliamentary hearing, Ken Kanofski acknowledged that without the increased debt limit approved in July, the company would have faced insolvency. This underscores the critical role of government support in maintaining TT-Line’s financial stability. Therefore, the Spirit of Tasmania operator was ‘insolvent,’ audit says, but the debt limit provides a safety net.
Future Outlook and Potential Solutions
The future of TT-Line and the Spirit of Tasmania hinges on the successful implementation of its revised corporate plan. This plan must address the company’s declining profitability, decreasing passenger numbers, and increasing debt burden. The board and management are exploring various options, including asset sales, restructuring, and continued government support, to ensure the long-term financial sustainability of the ferry service. The Spirit of Tasmania operator was ‘insolvent,’ audit says, and this situation necessitates a comprehensive and effective strategy to restore financial health.
The debate surrounding TT-Line’s solvency underscores the complexities of managing a state-owned entity in a challenging economic environment. While the Auditor-General’s report raises serious concerns, the board’s confidence in its assets and future strategies provides a contrasting perspective. Ultimately, the success of TT-Line will depend on its ability to adapt to changing market conditions, manage its debt effectively, and secure ongoing support from the government. The Spirit of Tasmania operator was ‘insolvent,’ audit says, but the future remains uncertain.
In conclusion, while the Auditor-General’s report indicated that the Spirit of Tasmania operator was ‘insolvent,’ audit says, the TT-Line board has refuted this claim, citing significant assets and ongoing efforts to develop a sustainable financial plan. The coming months will be critical as TT-Line presents its revised corporate plan to the government, outlining its strategy for addressing long-term financial challenges and ensuring the viability of this essential transportation service. The future of the Spirit of Tasmania operator was ‘insolvent,’ audit says, and the hope is that the company will stabilize soon.
Note: Information based on credible sources and industry analysis.
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