October 26, 2011

Air Pacific bailed out by taxpayers pension fund

Even as the news of Air Pac's shady bailout by superannuation fund, Fiji National Provident Fund (FNPF) makes the news, questions abound as to the hush-hush and unexpected way this deal has come about.

While Air Pacific aka Air Treason vehemently pledges [just like they pledged their non-involvement in the union muzzling decree], to make good on FNPF's investment via "healthy premiums", the mere fact that Air Pacific could not even scrape together the deposit in which to purchase these 3 new aircrafts lends weight to deeper questions behind their self-propogated fluff attempts to hide the hemorrhaging within the national airlines.

What also remains unsaid is why the airline, as a commercial entity, did not seek a commercial loan that most corporations do in acquisitions of this nature so that the risk is not borne by unwitting pensioners, particulary as Dave Pfielger's has hyped up their ability to pay back a "healthy premium".

While Air Pacific has (thanks to the CEO Dave Pfielger's benefactor Aiyaz Sayed Khaiyum) for the moment managed to calm down uproar from exporters and freight agents responding to Air Pacific's unilateral decision to downsize the frequency of their flights, this is the commercial world after all where healthy competition and true customer satisfaction reigns supreme.

The FNPF would do well to rethink their reforms particularly as this bailout has not gone unnoticed and will certainly not go unchallenged either.
Airline set to pay 'healthy premium'
Elenoa Baselala
Wednesday, October 26, 2011

CLOSE to $200million was borrowed by Air Pacific from the Fiji National Provident Fund (FNPF) for the purchase of three new aircraft costing about $1.06billion.

The FNPF funding was announced by the Attorney-General and Civil Aviation Minister Aiyaz Sayed-Khaiyum yesterday.

The minister said acquiring local funding was positive.

BUT Air Pacific chief executive and managing director Dave Pflieger said getting the loan approved was tough as the FNPF tried to establish whether the airline had the capability of repaying the loan.

He said the airline would pay a healthy premium to the FNPF for the loan.

The FNPF loan was used as a deposit for the new planes.

The other financiers are European credit agencies.

The airline in recent times had to undergo a restructure to return to profitability as well as place itself in a better footing to meet competition.

While the airline is not out of the "hot water", Mr Pflieger said the company had a lot more to do.

Apart from the reforms, which included the fleet change, the company was also able to improve its operations.

Mr Pflieger said the airline improved its on-time performance and beating other airlines such as Jet Star and Virgin Air.

Meanwhile, the new aircraft is expected to dramatically improve the appeal and effectiveness of Fiji's national carrier in achieving its goal of becoming the airline of choice in the South Pacific. Mr Pflieger said once the new planes were operational, he expected their superior range and payload.

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