Fiji Airways, the national airline of Fiji, faced significant challenges due to the pandemic, leading it to issue additional shares at a heavily discounted price of $4.22 each. This price reflects a 74 percent reduction from its share price at the end of 2019 and is part of a capital raising effort to navigate a drastic drop in revenue, which fell from $1 billion to nearly zero. The airline reported a monthly fixed cost of $39 million and uncertainties regarding border openings and travel demand.
When the existing shareholders, excluding the Fiji Government, opted not to participate in the share issuance, portions of the new shares were acquired by the Fiji National Provident Fund and the Unit Trust of Fiji.
The airline, in its annual report, detailed its struggles as financiers were uncertain about its survival during the pandemic. With guidance from BNP Paribas, a French bank specializing in aviation financing, the airline developed a seven-year financial model to evaluate its ability to meet debt obligations and identify necessary funding.
This financial model, which included more than 30 different scenarios, proved critical in raising $561.4 million for the airline through a Sovereign Government Debt Guarantee to enhance its cash reserves. To maintain operations, Fiji Airways implemented financing strategies including deferrals of aircraft lease rentals, securing over $380 million in new loans from the Asian Development Bank, and negotiating extended repayment periods for existing loans.
Additionally, on August 16, 2021, shareholders approved a capital raise of F$200 million through the issuance of up to 47,393,365 ordinary shares at the discounted price. In October of that year, the Republic of Fiji contributed F$101.9 million in new equity, acquiring 24,170,428 shares. However, most existing shareholders declined to participate, leading the board to offer the remaining shares to the Fiji National Provident Fund and the Unit Trust of Fiji.
By June 2022, the Fiji National Provident Fund had acquired 22,061,790 ordinary shares, representing 30.02 percent of the total shares, for F$93.1 million, while the Unit Trust of Fiji purchased 1,161,147 ordinary shares, or 1.58 percent, for F$4.9 million.