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🇫🇯 Fiji /Economy & Trade

Fiji Airways gets $200 million government guarantee amid fuel crisis

From FBC News · () English

Translated from English, summarized and contextualized by DistantNews.

At a glance

News Sources not specified New plan
  • Fiji Airways faces a $130 million increase in fuel costs, prompting the government to approve a $200 million guarantee.
  • The guarantee aims to strengthen the airline's liquidity and support operations amid the significant fuel price shock.
  • While opposition MPs supported the aid, they questioned the airline's risk management and fuel-hedging strategies.

Fiji Airways is grappling with a substantial $130 million surge in its fuel bill, a crisis the government acknowledges as the national carrier's biggest fuel shock in over half a century. To navigate these turbulent financial waters, the government has sanctioned an additional $200 million guarantee.

the current aviation fuel crisis is not normal price volatility and has placed significant pressure on the airline’s finances.

— Esrom ImmanuelFinance Minister Esrom Immanuel explaining the severity of the fuel cost increase.

Finance Minister Esrom Immanuel emphasized that this is not typical price volatility but a severe crisis placing immense pressure on the airline. The new guarantee is designed to bolster Fiji Airways' liquidity, ensuring its continued operation while it manages the escalating fuel expenses. A significant portion of this aid will replace existing collateral, while the remainder will support working capital facilities.

Tourism Minister Viliame Gavoka highlighted the airline's crucial role in the tourism sector, especially after Air New Zealand's service withdrawal. He noted that Fiji has already surpassed one million visitors and is on track for a strong tourism year, underscoring the importance of Fiji Airways maintaining its flight capacity. The airline has opted for cost-cutting measures, such as reducing catering expenses, rather than reducing services.

Fiji Airways remains critical to the tourism sector because of its role in maintaining international and domestic connectivity.

— Viliame GavokaTourism Minister Viliame Gavoka on the airline's importance to Fiji's economy.

However, opposition Members of Parliament voiced concerns, questioning the airline's preparedness for such fuel price fluctuations and urging a review of its broader financial strategies, including route viability, particularly the planned withdrawal from the Dallas route. The government indicated that route rationalization is part of a five-year profit plan targeting sustainable profitability by 2027. Additional support includes an extended tax-loss carry-forward period and waived fees.

fuel volatility is a known risk in the airline industry.

— Faiyaz KoyaOpposition MP Faiyaz Koya questioning the airline's risk management.
DistantNews Editorial

Originally published by FBC News in English. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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