Wanaka-based coach operator Connexions is to close, sparking fears up to 15 staff in the Queenstown Lakes/Central Otago districts will lose their jobs.
The move follows April's sale of Connexions' parent company, Dunedin City Council-owned Citibus Ltd, to Invercargill Passenger Transport Ltd.
Invercargill Passenger Transport managing director Tony Baas declined to comment yesterday.
However, a Connexions employee, who asked not to be named, confirmed he had received a letter in the post yesterday signed by Mr Baas informing him the business would close at the end of this month and staff would be made redundant.
The man said seven Wanaka-based Connexions drivers and three office workers had been issued with the redundancy notice.
He did not know if the three drivers in Queenstown and two in Cromwell had received the letter.
"It has come as a bit of a shock, because it was our understanding that Passenger Transport were going to be looking into Citibus ... and they were leaving Wanaka Connexions alone until they'd sorted out the Citibus side of things," the employee said.
"We were thinking 'Well, it might be the rest of the winter', because we've got skiers coming into the area that need to be transported from Queenstown to Wanaka and we're the only ones that go to the [Queenstown] airport [from Wanaka] as well."
The closure would be a big blow to Wanaka residents, he said.
"We've got locals up here who all of a sudden are not going to have a [Queenstown Airport] service, which is probably going to be a hard pill to digest."
Atomic Shuttles and Intercity both run return services once a day between Queenstown and Wanaka, but neither stops at Queenstown Airport.
A copy of the letter emailed to the Otago Daily Times said since Invercargill Passenger Transport had taken over Citibus and its employees, it had been "urgently reviewing aspects of the business".
It was well known Citibus was "incurring significant losses" which required "significant changes", the letter said.
"We have looked closely at the Connexions operations and, unfortunately, have concluded that we cannot hope to reshape them into a sustainable operation."
Discussions with a third party seeking to negotiate a sale of the Connexions business, and potentially securing ongoing employment for its staff, fell through, the letter said.
"We will instruct booking staff to cease taking new bookings beyond 30 June, and we propose to close the business that day.
" ... we anticipate issuing you notice of redundancy with effect from 30 June, 2011."
Connexions runs transport services between Queenstown and Dunedin, Wanaka and Dunedin, Queenstown and Wanaka - via Queenstown Airport and Cromwell - Queenstown/Wanaka to Middlemarch and Wanaka and Invercargill.
Sorren Coupland, manager of Holly's Backpackers in Wanaka, said the Connexions closure was "very sad".
A large number of the hostel's guests used the Connexions scheduled services, particularly in winter, and the loss of the Queenstown Airport to Wanaka run - which operates three times daily - would be a "logistical nightmare" for travellers.
People would have to travel from the airport into Queenstown to connect with a shuttle to Wanaka, which would mean staying a night in Queenstown.
"That can seriously impact on the money that they're prepared to spend while in Wanaka," Mr Coupland said.
