Fiji Airways has disclosed that it faced significant challenges during the COVID-19 pandemic, as financiers were uncertain about the airline’s survival. The airline’s annual report, presented to Parliament last week, revealed that BNP Paribas, a French international bank specializing in aviation finance, provided over 30 potential scenarios for how the airline could repay its debts.
Through this analysis, Fiji Airways was able to evaluate its ability to meet debt obligations, identify necessary funding, and determine the required restructuring of existing debts. The report indicated that financing was secured with the support of Sovereign Government Debt Guarantees aimed at addressing urgent financial needs stemming from COVID-19, allowing Fiji Airways to obtain $561.4 million to strengthen its cash reserves.
Key financial measures implemented included:
– New loan facilities exceeding $380 million, comprising $65 million from the Asian Development Bank and additional domestic loans, with repayment terms ranging from seven to 15 years.
– A four-year deferral for loan capital repayments across all loans.
– A nine-month deferral for aircraft lease rentals, to be repaid over six years as part of new loan facilities.
– A seven-year extension on the repayment terms for all existing loans.
The report also noted that, in 2021, shareholders approved a capital raising initiative of $200 million through the issuance of up to 47.3 million shares at a price of $4.22 each, reflecting a 74 percent discount compared to the end of 2019 share price. In October 2021, Fiji participated in this capital raise, contributing $101.9 million for 24.1 million ordinary shares.
The remaining shareholders opted out of the capital raising, prompting the board to offer the unclaimed shares to the Fiji National Provident Fund (FNPF) and the Unit Trust of Fiji. FNPF acquired 22.1 million ordinary shares, representing 30.02 percent of total shares issued, for an investment of $93.1 million, while the Unit Trust of Fiji purchased 1.2 million shares, equating to 1.58 percent, for $4.9 million.