The Vanuatu Daily Post said Joseph Laloyer was stood down by the airline's board of directors on Friday, with chief pilot Peter Fogarty installed in his place.

Laloyer was reportedly surprised at the move, saying that in 17 months in the position he had slashed the carrier's debts from some $14 million in 2008 to $1.2 million by 2010 and had restored public confidence in the airline.

"The cash flow crisis which the airline experienced before I took over is now under control and staff are paid their salaries on time," he told the newspaper.

The Daily Post said that Laloyer, who will appeal the decision, may have been replaced following an inquiry into allegations that Air Vanuatu planes were permitted to fly during a cyclone.

Air Vanuatu reportedly contributes 10 percent to the gross domestic product of the Pacific island country famed for its idyllic lifestyle.

Air Vanuatu's office in Port Vila could not be reached.

Copyright AFP (Agence France-Presse), 2011