Fiji Airways extends the cancellation of scheduled international flights to September.
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Fiji Airways Managing Director and CEO, Andre Viljoen says the airline company is not insolvent by any definition of the word, whether you look at the company’s cash flow or their balance sheet.
Viljoen says in the past 10 days, they have completed the audited financial statements for the year ended 31st December 2019.
He says the sign off marked the completion of a comprehensive audit by PWC of the company’s financial position.
Viljoen confirms this includes an assessment of their solvency and ability to meet future obligations.
The audited accounts are always filed with the Registrar of Companies Office and is available for the public.
The 2019 accounts will be filed within the next few days.
Fiji Airways has also confirmed to Fijivillage that the ongoing cost savings and cash preservation measures which include aircraft loan and rental payment deferrals, have progressively reduced the company’s monthly recurring fixed costs from $38 million to around $20 million until June 2021.
Viljoen says this, together with the company’s financing actions, will adequately bolster their cash reserves while they continue to implement further cost reductions.
Most of the aircraft loan and rental payment deferrals range from 9 to 12 months and are repayable over 3 to 6 years.
The new loans’ repayment terms now range from 6 to 15 years, with interest-only payments required for the first two years.
Viljoen says these financing actions puts Fiji Airways in the best possible position to get through this crisis.
He says the forecast for the cash reserve requirements are based on their ‘Worse Case’ scenario, which anticipates an extended period of border closures and a very slow ramp-up of travel demand thereafter.
The CEO says these scenarios have been independently validated by a leading international merchant bank and aviation consultancy.
Viljoen says they are extremely saddened by the ongoing detrimental assertions publicly about the airline.
He says recent press statements that suggest otherwise are simply false, and he is happy to enlighten those who have made such allegations.
Viljoen further says that whilst their lessors and financiers have the utmost confidence in Fiji Airways’ financial position, evidenced by the fact that they have recently supported them with payment deferrals and new loan facilities, it is nevertheless very damaging to the company’s reputation to have such false allegations circulating throughout the media.
He assures the Fijian people that their national airline is not insolvent or facing liquidation or bankruptcy.
In light of the recent heightened interest in Fiji Airways, Viljoen confirmed that he will host a series of briefings in Suva and Nadi for premier customers and the business community in the coming weeks.
These briefings, called ‘Know Your Airline’, will provide up-to-date information about the airline to these stakeholders.
We are getting Travel Ready and Commercial Ready – Viljoen
CEO says $455 million Govt Guarantees is not a cash bailout using taxpayer funds
Fiji Airways CEO and Managing Director, Andre Viljoen says they are working hard to get Travel Ready and Commercial Ready to bring the maximum number of passengers to Fiji when border restrictions ease up.
Viljoen says the airline has engaged with the hotels through a special taskforce to create substantially discounted holiday packages using the Fijian Government’s Recovery Rebate Package Programme travel stipend and many tax reductions to entice the maximum number of visitors back to Fiji from any market that opens up.
The reductions for these packages are upto 60 to 70% compared to pre-COVID prices.
Viljoen says there is also a misunderstanding regarding the $455 million Government Guarantees.
He says this is not a cash bailout using taxpayer funds provided to Fiji Airways by the Fijian Government.
The CEO says the financiers providing the new loans and the aircraft loan and rental deferrals have undertaken their own due diligence and have satisfied themselves that Fiji Airways can repay their obligations going forward.
He says the Fijian Government’s Guarantees, provide the additional security and comfort for these loans and deferrals.
Viljoen says Government has guaranteed large loans for other government-related entities in the past. He says these guarantees, as required under the law, need to be approved by Parliament, with all relevant details disclosed.
Publish the airline’s financial accounts - Prof Biman Prasad
Fiji Airways audited accounts are available to the public from the Registrar of Companies Office
National Federation Party Leader, Professor Biman Prasad says Fiji Airways CEO and Managing Director, Andre Viljoen should publish all the annual audited accounts of the airline for the last 10 years however the airline and the Government have said that all audited accounts are available to the public from the Office of the Registrar of Companies.
Following Viljoen’s comments that the airline is not insolvent, Prasad said Viljoen, his Chairman and his Minister are always ready to go public, with the required blaze of publicity to announce a profit but for more than 10 years they have refused to give them all the airline’s numbers.
Professor Prasad says Viljoen tells us that Fiji Airways’ lenders during this crisis have done due diligence and the lenders are satisfied that the airline can repay its financial obligations.
The NFP Leader says if that is true, then there is an obvious question for Viljoen - why do they want the Fijian Government to guarantee those obligations?
He also says that a few days ago, Viljoen said he would not respond to political statements, which Prasad says is an arrogant statement from a man who had just asked Fiji’s politicians to approve a $455 million Government guarantee.
Fiji Airways' 2019 Financial Statements will soon be available at the Registrar of Companies Office. This was confirmed by Fiji Airways and the Government at last week's announcement of the airline's 2019 financial results.
Audited Financial Statements of all large companies in Fiji are required to be submitted to the Registrar of Companies Office 4 months after completion of audits, although its understood that the Office can give extensions for the filings if requested.
The company says all Fiji Airways audited statements from 2018 dating back years is available publicly at the Registrar of Companies Office, as it is for all large companies.
A search for an audit report of the company athe Registrar of Companies Office is $10.90. People can print upto 10 pages of the report for $10.90 and it would costs 55 cents a page from page 11 onwards.
Fiji Airways Managing Director and CEO Andre Viljoen confirm that any revenue lost and any costs incurred by the airline company after the grounding of the Boeing Max 8 planes have been settled by Boeing.
Viljoen says Boeing has settled their financial claims and it is widely considered in the industry that Fiji Airways has received the best Max settlement from Boeing in the world.
He says they had robust negotiations on the settlement.
Viljoen says the Max 8s were part of a modernization program as the airline company had 20-year-old 737-800s.
He says these Max 8s were acquired to firstly save a lot of fuel.
Viljoen says the planes are 15 per cent more fuel-efficient but they have also got huge maintenance advantages and efficiencies.
The CEO says regretfully the accidents occurred and the Max 8s were grounded.
Viljoen says they then found themselves with a lot of operating constraints because there were three Max 8s to come and two got grounded. He also says two 20-year-old 737-800s had gone back.
He says they had to use some of their A330s to meet the obligations of their schedules and even for short periods rented planes on a weekly basis with pilots and crew from Malindo Air and Miami Air to keep the schedules going. Viljoen says Boeing Max 8s are still grounded but they are not needed for now.
He confirms Boeing is currently doing training and testing flights, and there is a belief by Boeing that by October they could possibly be certified to fly again.
Fiji Airways Managing Director and Chief Executive Officer, Andre Viljoen says despite the 2% increase in passenger numbers in 2019, they have lost more than 90,000 passengers to Qantas.
Viljoen says the increased passenger numbers by 2% is 1.7 million passengers compared to 1.67 million the year before.
Viljoen says in mid-2019, Fiji Airways was looking at forecasting a loss of $100 million from the profit of the year before of $50 million.
He says the negative forecast was created because the fuel prices continued to increase and cost another $29 million for the year and the impact of Qantas taking on the Sydney-Nadi route direct flights that resulted in loss of code-shared passengers which was estimated to be $65 million.
Viljoen says Qantas should be giving a lot of support to Fiji Airways as a strategic partner with a big shareholding.
Meanwhile, the Attorney General and Minister for Economy Aiyaz Sayed-Khaiyum says they are the only shareholder that has stepped forward for Fiji Airways.
Sayed-Khaiyum says they believe there is enough room for Fiji Airways to continue with the funding that they have requested to guarantee over and they will carry that for a period of time.
He says they are looking at the travel bubble as a holistic approach to create the robustness with the economy.
Fiji Airways has made a $61.2 million before tax profit in the year ending 31st December 2019 compared to $55.3M in the 2018 financial year.
Minister for Economy, Aiyaz Sayed-Khaiyum says he is concerned about some politicians and media outlets that are making false comments about Fiji Airways and have absolutely no understanding of the aviation sector and financing in the sector.
While speaking in a Fiji Airways press conference in Nadi, Sayed-Khaiyum says he is concerned about the irresponsible comments made by a politician that the national airline is facing liquidation or bankruptcy.
Sayed-Khaiyum says the national carrier brings in 70 percent of the tourists.
He says majority of the people in the hotel industry today have lost their jobs because we cannot bring the tourists due to COVID-19, yet the only conduit through which these hotels will be filled in would be Fiji Airways.
Sayed-Khaiyum also says the ADB is lending to an airline company for the first time, and this says a lot for Fiji Airways.
Meanwhile SODELPA MP, Ro Filipe Tuisawau had said in a statement that it is time for an urgent Parliamentary Inquiry into the national airline, which he says is facing liquidation or bankruptcy due to inability to repay the loans and make lease payments for the recently acquired and leased aircraft.
Ro Filipe has said that as Shadow Minister for Industry and Trade, he is submitting a motion to be tabled in the next parliamentary sitting, from 31st August to 4th September, 2020, for Parliament to establish a Special Committee, to inquire into the acquisition of the planes by outright purchase and leasing arrangements by Fiji Airways.
He says Fiji Airways CEO Andre Viljoen has said that the airline must find $38 million a month to repay loans and leases for the new aircraft.
Ro Filipe says that he is pleading with all Members of Parliament to urgently consider the national interest, above their petty party political interest, and vote for his motion for an inquiry.
He says the Government has now been forced to give its sovereign guarantee, as the airline is a strategic asset and the people of Fiji are the majority shareholder.
The Fiji National Provident Fund has corrected its earlier statement about the moratorium period provided to Fiji Airways for its loan facility.
FNPF is now saying the moratorium period is for previous loans given to Fiji Airways and not the $53.6 million loan given earlier this year.
FNPF had provided a loan facility of $181.2 million to Fiji Airways in 2013 for the purchase of the new A330s.
The Fund says this moratorium was on interest and airline company is still paying its principal repayment.
It says for the $53.6 million loan, Fiji Airways is paying principal and interest.
FNPF’s CEO, Jaoji Koroi says for previous existing facilities, FNPF has offered moratorium on principal and Fiji Airways continues to pay interest.
In a press conference yesterday, Koroi had stated that Fiji Airways has applied for a moratorium period on interest for their $53 million loan which they took earlier this year.
The FNPF has apologised to Fiji Airways for any inconvenience.
Minister for Economy, Aiyaz Sayed-Khaiyum has just announced that Fiji Airways will give $1,000 to all their employees from 31st December, 2019 as part of their profit-sharing arrangement.
Sayed-Khaiyum has announced this in a Fiji Airways press conference in Nadi.
He says this is for people still employed by the airline company or not.
The executives are not taking the $1,000 payment.
Fiji Airways has made a $61.2 million before tax profit in the year ending 31st December 2019 compared to $55.3 in the 2018 financial year.
This has been highlighted by the company’s CEO and Managing Director Andre Viljoen.
Sayed-Khaiyum also says anyone trying to carry out an analysis on the aviation sector in Fiji should look at what is happening in the industry and the region.
He also says Fiji Airways has managed to compete with it’s own second-largest shareholder, Qantas, recover from a projected $100 million loss to deliver a profit.
Fiji Airways has extended the cancellation of scheduled international services through to the end of September as no travel bubble arrangements have been confirmed between Fiji, Australia and New Zealand.
The flight cancellations are due to ongoing border closures and travel restrictions as a consequence of the COVID-19 pandemic, and will continue to affect the airline company’s financial position as it has had to take government guaranteed loans to continue to pay it’s loans and other expenses.
The airline company says it continues preparations for a revised network plan, which will be revealed when easing of border restrictions is announced.
Fiji Airways says it is also progressing with the implementation of its Travel Ready programme, which details measures to safeguard the health and medical safety of customers and staff when international flying resumes.
Fiji Airways’ freighter flights and Fiji Link domestic services will continue to operate.
Meanwhile the company has already confirmed that it is working to get payment deferrals for their planes for which leases are still being paid for. They have also gone into negotiations regarding their loans and raising debt finance.
Parliament had earlier approved the motion by Minister for Economy, Aiyaz Sayed-Khaiyum for the government to guarantee Fiji Airways loans totaling $455 million.
This includes domestic borrowings of up to FJ$191.1 million and off-shore borrowings of up to US$117.1 million.
The airline company has total fixed costs and other associated costs of $38 million a month.
Fiji Airways CEO and Managing Director Andre Viljoen had earlier said as there had been no cash flowing into the business, the primary focus for the airlines now is to preserve cash reserves.
Some of the measures taken to ensure the preservation of cash reserves is the termination of contracts of 758 of their staff, termination of contracts of their expatriate pilots and other management team members.
All of the airlines 79 expatriate pilots have had their contracts terminated and eight expatriate executives have had their employment terminated, with five expatriate staff remaining, including the CEO.
The CEO had also revealed that some staff who continue their employment have a 20 percent salary reduction and will also work between 2 to 5 days per week, and only be paid for actual days or hours worked.
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