In 1989 Australian Airlines, the successor to TAA and previously the owner of now-defunct Air Queensland, took a one-third share in Sunstate. Shortly afterwards Sunstate commenced operations out of Cairns and the fleet was somewhat rationalised, now consisting of 3 Short 360s, 2 Short 330s, 2 Twin Otters, and a Bandeirante transferred from the Mildura operation. Meanwhile, Sunstate Airlines (Mildura) was awarded a five-year contract to operate air ambulance flights on behalf of the Ambulance services of Victoria. To serve the contract it took a Cessna 404 the Queensland operation had acquired from the break-up of Air Queensland, its own Cessna 404, and four others. To maintain its airline operations a succession of Cessna 404s were leased one at a time from Eastern Australia Airlines, Australian Airlines' regional subsidiary in New South Wales.