Fiji Airways has disclosed the challenges it faced during the COVID-19 pandemic, highlighting concerns from financiers regarding the airline’s survival. The airline’s annual report, presented to Parliament, reveals that BNP Paribas, a French bank specializing in aviation financial advice, provided over 30 different scenarios to analyze how the airline could manage its debt repayments.
This comprehensive assessment helped Fiji Airways determine its capacity to meet debt obligations, identify necessary funding types, and evaluate the required restructuring of existing debts. The report indicates that financing was secured with the support of Sovereign Government Debt Guarantees, allowing Fiji Airways to obtain $561.4 million to enhance its cash reserves during the pandemic.
Key financing measures implemented include:
– Raising over $380 million through new loan facilities, with $65 million sourced from the Asian Development Bank, alongside further domestic borrowings, repayable over periods ranging from seven to 15 years.
– Deferring all loan capital repayments for four years.
– Deferring aircraft lease rentals for nine months, to be repaid over six years as part of the new loan facilities.
– Extending repayment terms for all existing loans by seven years.
Additionally, the report noted that in 2021, shareholders approved an equity capital raising initiative of $200 million, involving the issuance of up to 47.3 million shares at a discounted price of $4.22 each, reflecting a 74 percent decrease from the share price at the end of 2019.
In October 2021, Fiji participated in this capital raise, contributing $101.9 million in exchange for 24.1 million ordinary shares. Existing shareholders who chose not to participate had their shares offered 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 total shares issued, for an equity investment of $93.1 million, while the Unit Trust of Fiji obtained 1.2 million ordinary shares, or 1.58 percent of the total, for $4.9 million.