The Government’s contingent liability exposure to Fiji Airways has returned to about $500 million after a fresh $200 million guarantee was approved to help the airline navigate the fuel crisis.
This was revealed during a Standing Committee hearing on the national carrier’s 2024 annual report, after Opposition MP Alipate Tuicolo asked what milestones were attached to the airline’s mandatory financial action plan following approval of the guarantee.
Fiji Airways managing director and chief executive officer Paul Scurrah said the guarantee was not a grant and did not involve an immediate payment from Government coffers but provided backing for the airline to approach institutional banks.
“In order to do that, we need to be able to demonstrate to them that we have a plan to turn Fiji Airways into a sustainably profitable airline,” Mr Scurrah told the committee.
He said the national airline had also announced an additional 125,000 seats following a record 106,000 tourists arriving in July and the country exceeding one million visitors over a 12-month period for the first time.
“The five-year plan which has been approved by the board shows the path to profit and reinvestment in this airline and they’re the sorts of milestones that the banks themselves will ask to see even though the Government guarantee is there because no banker wants to have to call on that guarantee,” Mr Scurrah said.
“The team and I with the board’s backing have a plan to make this airline world-leading in every aspect.”
Fiji Airways chairman Nalin Patel said the airline was also required to report directly to the Ministry of Finance on its progress, providing the Government with oversight of its financial performance.
“There is a direct reporting on those to ensure that the exposure, you know, Government has full oversight through the ministry…that’s a line ministry that Fiji Airways reports to, so there are caveats and things like that.”
Mr Patel said the Government had provided about $500m in guarantees during the COVID-19 period, of which Fiji Airways had repaid more than $200m.
However, the latest $200m guarantee sought to help the airline manage the current fuel crisis has brought the Government’s contingent liability exposure back to about $500m.
Mr Patel said the support would help the airline navigate the fuel crisis without reducing flights and maintain Fiji’s international connectivity.
“This will help the airline navigate the current fuel crisis without reducing flights and keep Fiji open, given the economic contribution tourism and trade make to the Fijian economy.”
