Solomon Airlines pleads for gov’t support

Solomons – Solomon Airlines (IE, Honiara) needs state funding to survive after the Solomon Islands government extended the closure of its international border to January 31, 2021. The archipelago closed its borders on March 27, 2020, and recently extended the closure after recording its first COVID-19 case when a student who had arrived on a repatriation flight from the Philippines tested positive. In an open letter on the company website, Chief Executive Officer Brett Gebers said: “The future is unclear and our survival depends upon government support and the intermittent revenue we raise as we wait to reopen Solomon Islands’ borders and begin regular operations again”. The airline was still discussing with the government how much additional funding would be required if travel restrictions continued into 2021, he told Smart Aviation. According to local news reports, the government was to inject USD20 million from budget support credit in Solomon Airlines as capital and equity. This would consist of a USD5 million grant and a USD15 million concessional loan, reported The Island Sun News. The funding formed part of the SBD309 million Solomon dollars (USD37.9 million) economic stimulus package announced by the government in May 2020, to be funded through the issue of government bonds, from budget support, and other assistance provided by development partners, including USD26 million from the Asian Development Bank (ADB), USD20 million from the World Bank, and USD8.4 million from the government’s Department of Foreign Affairs and Trade Relations (DFAT). In addition, the International Monetary Fund in June 2020 approved the disbursement of USD28.5 million in emergency financing to the Solomon Islands. Gebers, in his open letter, said Solomon Airlines had “minimal cash reserves”, and was indebted to suppliers and creditors “who are working with us to keep us in business”. “The truth simply is, that with over 60% of the company’s revenue vanishing overnight and fixed costs remaining, there is a problem, and the daily reality for Solomon Airlines is now a case of survival, a dire situation which has required some drastic action,” he said.