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Thu, 27 August 2020

Fiji Airways CEO Says Airline Not Insolvent, Facing Liquidation or Bankruptcy

Fiji Airways today rejected recent negative assertions about the state of the airline's financial solvency.

Mr. Andre Viljoen, Fiji Airways Managing Director & CEO, said in a statement issued on Thursday, We are extremely saddened by the ongoing detrimental assertions publicly about our airline. Fiji Airways is not insolvent by any definition of the word, whether you look at our cash flow or our balance sheet. Recent press statements that suggest otherwise are simply false, and I am happy to enlighten those who have made such allegations. Whilst our lessors and financiers have the utmost confidence in Fiji Airways financial position, evidenced by the fact that they have recently supported us with payment deferrals and new loan facilities, it is nevertheless very damaging to our reputation to have such false allegations circulating throughout the media.

In the past 10 days, we completed our audited financial statements for the year ended 31 December 2019. The sign off marked the completion of a comprehensive audit by PWC of the companys financial position. This includes an assessment of our solvency and ability to meet our future obligations.

Fiji Airways Airbus A350-900 MSN299. Click to enlarge.

The ongoing cost savings and cash preservation measures commenced from March 2020, which include aircraft loan and rental payment deferrals, have progressively reduced our monthly recurring fixed costs from FJ$38 million by about 50% to around FJ$ 20 million until June 2021.

This, together with our financing actions, will adequately bolster our cash reserves while we continue to implement further cost reductions. Most of the aircraft loan and rental payment deferrals range from 9-12 months and are  repayable over 3-6 years. The new loans repayment terms range from 6 15 years, with interest-only payments required for the first two years. These financing actions put us in the best possible position to get through this Crisis.

The forecast for our cash reserve requirements are based on our Worse Case scenario, which anticipates an extended period of border closures and a very slow ramp-up of travel demand thereafter. These scenarios have been independently validated by a leading international merchant bank and aviation consultancy.

Mr. Viljoen added, I wish to assure the Fijian people that your national airline is not insolvent or facing liquidation or bankruptcy. On the contrary, we are working hard to get Travel Ready and Commercial Ready to bring the maximum number of passengers to Fiji when border restrictions ease-up. We have engaged with the hotels through a special taskforce to create substantially discounted holiday packages using the Fijian Governments 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.

He further clarified: There is also a misunderstanding regarding the FJ$455 million Government Guarantees. This is not a cash bailout using taxpayer funds provided to Fiji Airways by the Fijian Government. The financiers providing the new loans and the aircraft loan and rental deferrals have undertaken their own due diligences and have satisfied themselves that Fiji Airways can repay their obligations going forward. The Fijian Governments Guarantees, which we are extremely grateful for, provide the additional security and comfort for these loans and deferrals. Government has guaranteed large loans for other government-related entities in the past. These guarantees, as required under the law, need to be approved by Parliament, with all relevant details disclosed.

The airline is expected to host a series of briefings in Suva and Nadi for premier customers and the business community in the coming weeks to provide up-to-date information about the airline.

See latest Travel News, Video Interviews, Podcasts and other news regarding: COVID19, Fiji Airways, Fiji.

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