Fiji Airways has disclosed that it faced significant challenges during the COVID-19 pandemic, with financiers uncertain about the airline’s survival. In its annual report to Parliament, the airline revealed that BNP Paribas, a French bank specializing in aviation finance, presented over 30 different scenarios regarding the airline’s ability to repay its debts.
This analysis allowed Fiji Airways to evaluate its capacity to meet debt obligations and identify necessary funding and restructuring needed for existing debts. The report noted that financing was obtained through Sovereign Government Debt Guarantees to address urgent COVID-related financial needs, allowing Fiji Airways to secure $561.4 million aimed at enhancing its cash reserves.
Key financing measures included:
– The raising of new loan facilities exceeding $380 million, with $65 million sourced from the Asian Development Bank and additional domestic borrowings, all repayable over extended periods ranging from seven to 15 years.
– A four-year deferral on loan capital repayments for all loans.
– Deferrals on aircraft lease rentals for nine months, to be repaid over six years through new loans included in the aforementioned loan facilities.
– A seven-year extension on repayment terms for all existing loans.
The report also mentioned that in 2021, shareholders approved a $200 million equity capital raising, involving the issuance of up to 47.3 million shares at an issue price of $4.22 each, reflecting a 74% discount compared to the share price at the end of 2019. In October 2021, the Fijian government participated in this capital raising, contributing $101.9 million for 24.1 million ordinary shares.
Remaining shareholders chose not to partake in the capital raising, leading the board to offer the leftover shares to the Fiji National Provident Fund (FNPF) and the Unit Trust of Fiji. The FNPF acquired 22.1 million ordinary shares, amounting to 30.02% of the total shares issued, for equity valued at $93.1 million, while the Unit Trust of Fiji purchased 1.2 million shares, representing 1.58% of total shares, for $4.9 million in equity.