Fiji Airways bags new low interest loans

The Fijian government has confirmed that Fiji Airways (FJ, Nadi) has obtained new loans of an undisclosed amount ranging from seven to 15 years at interest rates ranging from 3% to 5%.

This was disclosed to the Fijian Parliament on August 17, 2021, by Attorney-General and Economy Minister, Aiyaz Sayed-Khaiyum. He was responding to a question from Opposition MP Filipe Tuisawau on details regarding aircraft leased by Fiji Airways, including loans and lease payments.

From the onset of COVID-19 and resulting lockdowns in March 2020, Fiji Airways has taken immediate steps to reduce costs and preserve cash, which included stopping all non-critical projects and putting all aircraft into storage.

He said the airline has successfully negotiated with existing financiers to defer principal payments for two to four years while reprofiling debt repayments for seven years.

In addition, it has negotiated six- to nine-month aircraft rental payment deferrals with lessors where the total deferral amounts will be repaid over six years as a new loan.

All these actions reduced its monthly recurrent fixed costs from FJD39 million Fijian dollars (USD18.4 million) to FJD25 million (USD11.7 million). “This was a key measure to preserve cash,” he said.

The Fijian government – sanctioned by Parliament – had provided a FJD455 million (USD214.7 million) guarantee to secure this refinancing.

In May 2021, the Fijian Parliament approved an amendment to the government guarantee terms: Fiji Airways’ loans would be valid until the guarantee facilities were discharged by the lender or fully settled; and that Fiji Airways would pay a one-off fee of 15% on the government guarantee.

“This financing programme to tide the airline over the unprecedented COVID-19 pandemic and resulting crisis in aviation was a gargantuan task. It is clear that borders will remain shut through the end of 2021, much later than Fiji Airways had envisioned and hoped.

“The airline has 28 versions of a seven-year monthly financial forecast and actions to take for each, which is the only way that financiers were confident and approved the various financing actions, like repro-filing loans and lease repayment terms.”

Sayed-Khaiyum said it was imperative that the new loans to the airline due to COVID-19 and forced border closures had the maximum possible repayment period, ideally between 10 to 15 years with low-interest rates. The airline would only pay interest in the first two to four years, in other words, no principal payments, he concluded.

As previously reported, Sayed-Khaiyum in May told Parliament the airline’s overall debt amounted to FJD762 million (USD368.28 million), of which the Fiji National Provident Fund (FNPF) was owed 30%, the Fiji Development Bank (FDB) 10%, various German banks 30%, the Asian Development Bank (ADB) 18%, and lessors 12%. The airline earlier in August returned two A330-200s to Carlyle Aviation Partners ahead of lease-end date to reduce fixed costs.

The carrier’s current fleet still comprises 20 aircraft. Its jet fleet includes three A330-200s, one A330-300, two A350-900s, five B737-8s, and two B737-800s. Its turboprop fleet, operated by Fiji Link (FJA, Nadi), includes one ATR42-600, two ATR72-600s, and four DHC-6-400s, according to the ch-aviation fleets advanced module.