Fiji Airways Receives Government Aid, Lays Off Half Of Workforce

Fiji Airways, a small air carrier in the South Pacific, has had a very busy early part of the week. On Tuesday, Fiji’s national airline said it received financial assistance from the Fiji government, one day after the carrier laid off hundreds of its workers.

On Monday, Fiji Airways, announced it has laid off 758 employees, or about 51% of its workforce. The carrier blamed the COVID-19 crisis which “endures, causing the further suspension of scheduled international services and ensuring that the airline will receive virtually zero revenue in the coming months.”

Fiji Airways also said it has entered into negotiations with its lenders and aircraft lessors for loan and lease payment deferrals.

“The sad reality of prolonged flight suspensions means that we simply do not have work for a large segment of our workforce now, and for the foreseeable future,” said Andre Viljoen, Fiji Airways Managing Director & CEO. “We have no other option but to terminate the employment of staff to whom we cannot provide work, which is an unfortunate but vital step we must take in order to protect our cash position and to preserve as many jobs as possible for those staff who the business needs in order to function today.”

Fiji Airways recently extended the suspension of international flights through the end of June, and will also reduce scheduled flights for July and August.

“Most of our workforce agreed to a temporary 30%-35% pay reduction,” Viljoen added. “However, regrettably, all of our international passenger services remain suspended, and it is simply not sustainable to continue to pay staff who are at home and not working, even at reduced salary levels. We have a responsibility to our shareholders, and to the Fijian people, to ensure that Fiji Airways survives this crisis.”

Fiji Airways further said it has terminated eight expatriate executives, leaving five expatriate staff remaining, including the CEO. The airline has six local executives, who will all keep their jobs.

All 79 expatriate pilots have had their contracts terminated.

In addition, the airline has imposed a 20% permanent salary reduction for all retained employees, effective June 1.

“Tourism is the backbone of the Fijian economy, and it is dependent on a strong and sustainable national carrier,” Viljoen declared.

Tourism to Fiji is valued at more than $2 billion annually – or about one-third of the island’s gross domestic product.

“Fiji Airways will be vital in leading Fiji’s economic recovery post COVID-19, and we take that obligation to the Fijian people very seriously,” Viljoen added. “Many large and respected airlines around the world are collapsing as a consequence of this unprecedented crisis. However, we will do everything within our power to ensure that Fiji Airways does not suffer the same fate.”

The airline received good news on Tuesday when the Fijian Government agreed to support the company through sovereign guarantees – in the form of $201 million of initiatives, including payment deferrals, and new long-term debt financing -- for the duration of the covid-19 crisis.

“With effectively no travel demand and therefore no cash flowing into the business, our primary focus since March has been the preservation of cash reserves, negotiating payment deferral arrangements with aircraft financiers, lessors, and suppliers, and raising new debt finance,” Viljoen said.

Simple Flying noted that Fiji Airways is “a small but vital cog in South Pacific aviation.”

Fiji is also eager to join the proposed Australia- New Zealand “travel bubble” as the majority of tourists arrivals in Fiji hail from Australia and New Zealand.

Last week Fiji’s Attorney-General and Economy Minister Aiyaz Sayed-Khaiyum told The Australian Financial Review that joining the bubble – which would permit trips between the countries without the need for quarantines – would benefit Fiji more than any form of assistance.