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Why we’re bailing out Fiji Airways: FNPF

The Fiji National Provident Fund (FNPF) is helping to bail out Fiji Airways as it is a strategic investment for tourism, which accounts for around 16 percent of the Fund’s investment portfolio.
 

While confirming FNPF’s participation in the Fiji Government-guaranteed loan facility of F$455 million (US$207 million)  approved by Parliament last week, FNPF CEO Jaoji Koroi said interest payments, deferment and related issues will be discussed with the borrower under the Fund’s new lending facility, in which its borrowers can make suitable arragements in light of difficulties faced due to COVID-19.

“FNPF has always had a strategic relationship with Fiji Airways. We’re a long term investor and we see Fiji Airways as a strategic asset for Fiji because tourism is quite important and having a strong airline is crucial for our investments in the tourism sector. As you know after the Global Financial Crisis, we had that investment with Fiji Airways through a loan and that has yielded good results over the years. In fact, members have received close to $65.1million in interest from that lending facility since then. We’re going through a very important cycle, and we still need to look to the future. We still need that strategic asset to grow and continue to bring back what we all look forward to, which is a strong tourism sector,” Koroi said.

“It’s a matter of looking over the next two years or so, we understand the capacity and what needs to be done. I think Fiji Airways has also done internal restructuring of their balance sheet in terms of what to let go and what to keep, so that it can be a finer company that we can improve. So we’re looking at participating in that facility and because it’s now a government guarantee, we’re taking a risk on the lending.” Koroi said.

Attorney General and Minister for Economy Aiyaz Sayed-Khaiyum detailed the loan structure in Parliament last week as comprising domestic borrowing (F$191.1m) and offshore borrowings (U.S$117.1m), or a total of F$455million spread over a three year period, effective May 30, 2020.

“Companies like ADB and all these international funding agencies are also looking to be part of that facility, so I think the message is: ok, two years is going to be tough but we need Fiji Airways to come out strongly for the future of the country,” Koroi said, when asked about the likelihood that the national airline may not be able to pay anything in the first year since tourism is still crippled.

As revealed by Sayed-Khaiyum last week, $56.3 million is coming from FNPF while the rest will be borne by other local agencies including the Reserve Bank of Fiji and ANZ Bank.

FNPF, whose exposure in the tourism sector is around 16 percent, owns most of Fiji’s major hotels and hotel properties in Fiji’s tourist belt in Nadi as well as in Suva.

*Editor’s note: This article was updated on June 5 after FNPF provided updated figures.

 

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