"Nowhere near" profitability, Samoa Airways Minister admits

Samoa Airways remains "nowhere near" profitability and is forecasting five consecutive years of financial losses, the Minister in charge of the national carrier has admitted in an interview. 

“The public needs to understand that the situation [is like] the operation of any new company," the Minister for Public Enterprises, Lautafi Selafi Purcell, told the Samoa Observer.

"We are nowhere near running a profitable operation yet. That is the nature of any newly established airline."

Recently released figures for the final quarter of the last calendar year showed that the airline's jet operations racked up $6.64 million in losses. 

The Minister refused to comment on whether further losses have been sustained this year. 

The entire global airline industry has been hit hard by the March global grounding of Boeing Max aircraft following crashes in Indonesia and in Africa.

Samoa Airways had been due to lease an affected Boeing model just as the ban took effect. 

It instead secured a 737-800 on a "wet lease" from Malaysian airline Malindo but the grounding has made leasing conditions much less favourable, according to a report from the Wall Street Journal that suggests prices have jumped by more than 40 per cent. (The Malindo lease was this week extended for another six months). 

Lautafi took issue with this newspaper's reporting on the airline's Q4 losses. 

Those reports were taken from figures contained in a performance report submitted to the Ministry of Public Enterprises, which has oversight of the airline and other public bodies.

“The annual report is the most official report, those are quarterly reports and that is really [only] for internal processes," Lautafi said. 

“There are four quarterly reports and it is mostly for internal processes and the report [featured in the Samoa Observer story] is just one of the four quarterly reports.” 

As at Friday the report had been taken down from the Ministry's website.

But the Minister did not deny that the airline was "operating at a loss". 

“We are cutting our losses and slowly building up and then we will see the profits," he said. 

The Minister was adamant the carrier could weather current financial hardship and was steadily reducing losses and positioning for future profit.

“But we are not there yet!," he said. "As I said before, Airlines in other parts of the world will not make any profits within the first five years; of course we are operating on losses. And that will always be the case for a newly established Airline".

“As I said before, we have partnered up with the travels agents in New Zealand and Australia who are selling us to the world and it’s been good in the last two months."

The Q4 financials showed the airlines “other operations” generated a profit of $1,455,954. 

But its jet operation ran at a loss of $6,640,178. Its year-to-date net loss for was $4,805,440; the increasing price of jet fuel was cited as a contributing factor to the losses incurred by its jet operations. 

Last year Samoa Airways took on a $15 million loan from the Unit Trust of Samoa. 

Bg pattern light


Subscribe to Samoa Observer Online

Enjoy access to over a thousand articles per month, on any device as well as feature-length investigative articles.

Ready to signup?