Fiji Airways has developed a five-year plan to return the national airline to sustainable profitability and ensure the Government is never required to honour its financial guarantee.
Chief Executive Officer Paul Scurrah told the Standing Committee on Social Affairs yesterday that the airline’s board had approved a strategy focused on reducing costs, expanding operations and generating sufficient profits to reinvest in the business.
He clarified that the Government guarantee was not a direct financial contribution from taxpayers but provided the airline with backing to secure financing from institutional banks.
“So that government guarantee isn’t a government grant, or doesn’t come out of government coffers. It provides us the backing to go to institutional banks,” Mr Scurrah said.
However, he stressed that the airline must demonstrate to lenders that it has a credible plan to achieve sustainable profitability.
“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 said recent changes to the airline’s cost structure had already enabled it to announce an additional 125,000 seats on flights into and out of Fiji.
He described the expansion as a significant development that demonstrated the airline’s ability to grow while maintaining financial discipline.
“You would have seen recently with a number of the changes we’re making and getting the cost base into a more sustainable position, that we were able to announce another 125,000 seats, a massive expansion of the amount of seats we’re flying in and out of Fiji.”
He said the expansion formed part of the airline’s broader strategy to demonstrate financial stability and reassure lenders that the Government guarantee would not need to be activated.
“That is part of the story that we need to tell in order to have confidence that we are in a position that the government will never be asked to call on that guarantee.”
Mr Scurrah said the five-year plan outlined clear milestones for profitability and reinvestment, which financial institutions would closely monitor.
“And so that five-year plan, which has been approved by the board, shows the path to profit and reinvestment in this airline.”
He stressed that banks would still require evidence of the airline’s financial performance despite the existence of the Government guarantee.
“Even though the government guarantee is there, because no banker wants to have to call on that guarantee.”
Mr Scurrah said the airline’s leadership and board were committed to raising service standards while keeping operations affordable.
“The team and I, with the board’s backing, have a plan to make this airline world-leading in every aspect.”
He said the airline was resetting its standards to meet the expectations of Fijians and international passengers while ensuring sufficient funds remained available for future expansion.
Mr Scurrah reiterated that the success of the five-year strategy would be critical to protecting the Government from potential financial exposure.
“But we know that plan is integral to making sure that that guarantee that has been provided is never called upon.”
