Former Prime Minister Hu’akavameiliku Siaosi Sovaleni has affirmed that Lulutai Airlines, a government-owned carrier in Tonga currently grappling with financial issues, has adequate assets to address its debts. His remarks come in response to the critical assessment of the airline’s financial health by Prime Minister Aisake ‘Eke,’ who recently described the situation as severe.
In a move to address the ongoing challenges, Prime Minister ‘Eke’ and Minister of Public Enterprises Piveni Piukala revealed that an evaluation of Lulutai’s operations and financial status is underway, considering the possibility of winding down the airline. During a press conference held in Nuku’alofa, Sovaleni, who once chaired the board of Lulutai Airlines, expressed optimism about the airline’s potential to overcome its current difficulties.
Sovaleni highlighted that Lulutai had recently made progress in reducing its debts, repaying TO$800,000 (US$332,823) of a TO$6 million (US$2.49 million) loan owed to the Retirement Fund Board, which owns 27.19 percent of the airline. While the remaining balance due to the Retirement Fund stands at approximately TO$5.7 million (US$2.37 million) including principal and interest, Sovaleni confidently asserted that the airline’s assets are sufficient to cover its obligations, countering fears of imminent insolvency.
In addressing allegations regarding Lulutai’s financial strategy, Sovaleni clarified that the airline has not sought a TO$7 million (US$2.90 million) government grant but is instead pursuing a loan that is intended to be repaid.
Changes in leadership within Lulutai have also been noted, with the recent departure of CEO Poasi Tei and the appointment of Tevita Palu, a businessman with aviation experience, to spearhead the operational review.
This unfolding situation not only highlights the financial struggles within Tonga’s aviation sector but also points towards a potential path for recovery and restructuring. With dedicated assessments and improvements in management practices, there is hope for Lulutai Airlines to emerge as a more reliable service provider for the people of Tonga, contributing to a strengthened aviation framework in the region moving forward.
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