The Tongan government is contemplating the termination of services provided by Lulutai Airlines due to its inability to fulfill financial obligations, as indicated by the Minister for Public Enterprises, Piveni Piukala. This concern has arisen amidst alarming reports that Lulutai has borrowed substantial amounts from public servants’ retirement funds, leading to significant unease among civil servants about the viability of their retirement security.
During a recent media briefing, Piukala described Lulutai Airlines’ operational status as “very cloudy” and noted that the airline’s management has requested $7 million (US$2.90 million) to attempt to revive the company. He emphasized that without this funding, liquidation may be the only path forward for the airline.
The review of Lulutai Airlines highlights a broader financial dilemma for the government, as prior administrations have invested approximately $21 million (US$8.71 million) into the airline. Piukala revealed that Lulutai had also secured a $10 million (US$4.14 million) loan from the Retirement Fund Board, which was partially utilized to purchase a new Twin Otter aircraft while the remainder went toward share purchases.
Prime Minister Eke expressed that the government is currently assessing the financial viability of Lulutai Airlines, aiming to evaluate its operational capabilities and the qualifications of its personnel. Previous comments from Eke suggested that, while the loan from the Retirement Fund Board is guaranteed by the government, there are still considerable concerns regarding transparency and the possibility of financial losses associated with the airline.
Should Lulutai Airlines face liquidation, it would join a list of other airlines that have shut down operations in Tonga, reflecting the ongoing challenges within the aviation sector, particularly in the Pacific Islands, where airlines generally struggle to maintain profitability.
In times of adversity, the focus on transparency and operational assessment could lay the groundwork for future improvements in the airline industry in Tonga, potentially paving the way for new ventures that prioritize sustainability and service reliability.
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