Fiji Airways has disclosed the challenges it faced during the COVID-19 pandemic, as financiers were uncertain about the airline’s survival. The airline’s annual report presented to Parliament outlined how BNP Paribas, a French bank focused on aviation financial advisory, provided over 30 different scenarios to assess the airline’s debt repayment capabilities.
This analysis allowed Fiji Airways to determine its ability to meet debt obligations, the necessary types of funding, and the re-profiling needed for its existing debts. The report indicated that the airline secured $561.4 million through the support of Sovereign Government Debt Guarantees, aimed at enhancing its cash reserves during the urgent financial crisis caused by COVID-19.
Key financing measures implemented included the following:
– New loan facilities exceeding $380 million, with $65 million sourced from the Asian Development Bank and additional domestic borrowings, repayable over terms ranging from seven to 15 years.
– Four-year deferrals on all loan capital repayments.
– Nine-month deferrals on aircraft lease rentals, to be repaid over six years as new loan arrangements.
– A seven-year extension on the repayment terms for all existing loans.
The report further noted that in 2021, shareholders approved a $200 million equity capital raising at a special general meeting, allowing for the issuance of up to 47.3 million shares at a price of $4.22 per share, reflecting a 74 percent discount compared to the share price at the end of 2019.
In October 2021, Fiji participated in the capital raise by contributing $101.9 million for 24.1 million ordinary shares. However, other existing shareholders chose not to participate, leading the board of directors to offer the remaining shares to the Fiji National Provident Fund and the Unit Trust of Fiji. The FNPF acquired 22.1 million ordinary shares, representing 30.02 percent of the total shares issued, in exchange for $93.1 million, while the Unit Trust of Fiji acquired 1.2 million ordinary shares, or 1.58 percent, for $4.9 million.