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Air Niugini wary of flying into Qantas path

National carrier to sell shares

As leading regional airline operators announced a disastrous past 12 months in profit trading, Papua New Guinea’s Air Niugini declared it will sell its ownership in an attempt to attract new investors. Mega losses by Australia’s Qantas and Virgin Airways – the two main carriers of tourists to the region – has prompted a new round of price wars for traveller market as the airlines prepare for the busy Christmas period. Government insiders in Port Moresby assert that the national carrier has potential to turn into profitability should Air Niugini inject some private sector funds. With the proposed move, the government will lose 49 per cent of Air Niugini to foreign and local investors.

New shareholders will ensure the national PNG carrier – one of four largest stateowned-enterprises along with PNG Ports, PNG Power and Telikom – stay afloat and remain “sufficiently viable and competitive to face similar challenges to Qantas and Virgin,” noted Ben Micah, Minister for Public Enterprise and State Investment Minister. Australian flag carrier Qantas last month posted an unprecedented record loss of A$2.84 billion (US$2.65) billion amidst a global doom in aviation industry, plagued by high fuel costs and fierce competition from subsidised rivals.

As part of its bid to turn around its fortunes, Qantas quickly moved to axe 5000 jobs, defer new aircraft purchases, cut routes and put on hold plans to expand its low-budget offshoot carrier, Jetstar. Qantas has regularly complained that government restrictions prohibit the airline from sourcing capital from outside its limited shareholder base, unlike its rival Virgin – which is majority-owned by state-backed Air New Zealand, Singapore Airlines and Etihad – all of which are profitable in their own right.

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