Fiji’s Labour Party said this week that the national airline is unlikely to survive unless it conducts a comprehensive review and restructuring of its operations. The party called for a viable rescue plan as international borders with Australia and New Zealand are likely to remain closed for some time.
Fiji Airways suffers as borders remain shut
As the world learns to live with COVID-19, many countries are slowly beginning to open their borders to international travel. However, several countries have decided to keep their borders shut, including Australia and New Zealand. This is unwelcome news for Fiji Airways as a large number of its international routes are unable to operate.
As the effects of the coronavirus pandemic continue to cause problems for the airline, Fiji’s Labour Party leader, Mahendra Chaudhry, has called on the airline this week to come up with a rescue plan. The former Prime Minister told The Fiji Times,
“The national airline is unlikely to survive without a comprehensive review and restructuring of its operations — finances, workforce, fleet size, flight schedules, and destinations.”
He added that Fijians were entitled to know how the airline planned to restructure itself without becoming a liability on the taxpayer.
Last month parliament approved a massive post-COVID-19 bailout of $213 million to the airline. There are concerns that this will not be enough money to sustain the airline, especially as the borders with Australia and New Zealand show no signs of reopening. New Zealand announced its first COVID-19 cases this week in over 100 days, and Australia recorded its worst single-day rise in deaths.
This is bad news for Fiji Airways, which was forced to suspend 95% of its international flights in March. This week, Fiji Airways extended its cancellation of scheduled international services until the end of September.
Newly-leased aircraft left unused
The airline announced further financial woes this week as it said it was unable to return the newly-leased planes that are sitting unused at Nadi Airport. Due to complex binding agreements, Fiji Airways told The Fiji Times that it would be unable to return the million-dollar Airbus A350 XWB aircraft that it had recently received.
Fiji Airways managing director and CEO Andre Viljoen said that the airline needed $17.8 million (38 million Fijian dollars) a month to meet current costs. He said that if the payments were not met, it could result in the company entering liquidation.
“If you miss a few payments, they take them back, all of the aircraft and all of the future payments immediately become due unpayable and that will put you in liquidation before you even blink.”
Cutting costs
The Labour leader, Mahendra Chaudhry, suggested that the airline should retire aircraft that were uneconomical to run or over the requirement. He added that the airline should focus on employing local people, and employ expatriates only when a local did not have the necessary qualifications for the job.
In May, nearly 800 Fiji Airways staff were made redundant, including all 79 expatriate pilots and eight expatriate executives. Fiji Airways has six local executives who have retained their jobs. They now make up the majority of the leadership team. All staff can reapply for their positions once the situation allowed.
What do you think about Fiji Airways’ recent troubles? Can the airline survive? Let us know in the comments.