Fiji’s Parliament has approved an FJD106.4 million Fiji dollar (USD51.3 million) increase of existing government guarantees on Fiji Airways (FJ, Nadi) borrowings from FJD455 million (USD214.7 million) to FJD561.4 million (USD270.9 million).

This follows a motion tabled by Attorney-General and Economy Minister, Aiyaz Sayed-Khaiyum, in the Fijian parliament last week.

The top-up is effected by increasing the existing locally approved government-guaranteed loans from FJD191.1 million (USD92.2 million) to FJD 241.1 million (USD116.3 million); and increasing off-shore borrowings from USD117.1 million to USD142.1 million, resulting in the total guarantee ceiling increasing to FJD 561.4 million, valid until the guarantee facilities are discharged or fully settled. Parliament also approved a motion that Fiji Airways be exempted from paying a guarantee fee.

Addressing Parliament, Sayed-Khaiyum said Fiji Airways would use the additional FJD106.4million loan guarantee for contingency financing.

He said Fiji Airways would use FJDF50 million (USD24.1 million) to refinance its in-house pilot training “Fijian Aviation Academy”. This would involve raising finance using its aviation academy assets, comprising the building, and two full flight simulators.

“Fiji Airways is in discussion with the Asian Development Bank (ADB) to provide a USD25million asset-based secured loan with a 10-year term to the academy division. In light of this, Fiji Airways requests an additional USD25million government guarantee for its off-shore borrowings from ADB, and an additional FJD50million (USD24.1 million) for its local borrowings. Taking into account exchange rate fluctuations, the total proposed government guarantee for Fiji Airways amounts to FJD106.4million,” he said.

While tabling the motion, Sayed-Khaiyum also disclosed that the Fiji government on August 9, 2021, had increased its majority shareholding in the airline from 51% to 74.56%. This followed from the airline having floated just over 24 million shares to raise equity of FJD200 million (USD96.5 million) in order to support itself through the pandemic. The government had a pro-rata entitlement to the shares at four dollars and 22 cents per share, which amounted to FJD102 million (USD49.2 million). The government had offset the payment for the shares with a FJD94.4 million (USD45.5 million) fee owed by Fiji Airways, while the remaining FJD7.6 million (USD3.6 million) was paid in cash.

The other shareholders in Fiji Airways include Qantas (QF, Sydney Kingsford Smith) with 24.04%, Air New Zealand (NZ, Auckland Int'l) with 1%, the Government of Kiribati with 0.14%, the Government of Tonga with 0.14%, the Government of Samoa with 0.06%, and the Government of Nauru with 0.05%.