Former Poly Manager cautions about Samoa Airways

A former Polynesian Airlines General Manager, Papali'i Grant Percival, has reminded the Government that Samoa Airways’ ownership rests with Samoan people, who fund it through the public purse. And during a global catastrophe for the airline industry, he has cautioned that continued investment into the airline is fraught with risk.

His comments come after Prime Minister, Tuilaepa Dr. Sailele Malielegaoi, dismissed reports the airline is in financial danger following reports that it is $64 million deep in accumulated losses.

“Samoa Airways is managed by a [Chief Executive Officer] and governed by the Board of Directors. The Prime Minister and Cabinet are the voted political leaders of Samoa,” Papalii said. “The ownership of the airline rests with the people of Samoa.”

He said if the airline’s management does take on risk, it falls to the shareholder – the public – to provide the extra funding for additional investments.

“At present investment in the aviation industry is fraught with failure given the losses the industry has incurred not only during the recent period but into the foreseeable future."

Samoa Airway’s financial issues were recorded in the 2018-19 annual report, a copy of which was obtained by the Weekend Observer. 

It shows its total liabilities exceeding total assets by more than $11 million, which the Assistant Controller and Auditor-General writes “may cast significant doubt about the company’s ability to continue.” 

The airline also owes more than $400,000 to Sheraton Samoa Aggie Grey’s Hotel in Apia when it accommodated the Malindo Air crew.

But Tuilaepa insists there is “nothing to worry about,” and said people should stop “prying” into Samoa Airways’ finances.

“There is nothing to worry about! So what if the losses accumulate to $100 million, the [airline] is to cater for our people,” the Prime Minister said on his TV3 programme on Wednesday last week. 

“The Government has long-term plans in place for the airline.” 

He claims developing Samoa Airways cannot be done without going into debt and criticised this newspaper’s reporting on the distressed airline.

“They always looked for anything negative to criticise. When the airline was in operation they [were singing] hallelujah and now there are no flights, they are talking about the debts,” the Prime Minister said. 

“Leave the debts to the Government who are experts in the handling of the debts and stop prying [into the finances] of the company.”

Papalii, who managed Polynesian Airlines until 1994, said Samoa has not invested enough in human, material and knowledge resources to sustain the airline in today’s uncertain climate.

“Investment needs to recognize the current and future trading environment and the ability of the investor to sustain losses,” he said.

“Operating costs in aviation are high. Human, material and knowledge resources are high and Samoa has not invested in these areas.       

“Until we can build these it is going to be difficult to spend scarce financial resources on an uncertain future.”

Much of the global airline industry is hoping the new COVID-19 vaccines will help them recover from a devastating 2020.

For Samoa, the pandemic was another hit to an already down airline, with the Boeing 737-Max grounded after major crashes in recent years. Samoa Airways had initially planned to bring a Max to Samoa and could not.

Now, its leased 737-800 is waiting for border relaxations so that it can be flown from the Netherlands to Samoa. 

Papalii said that the elected representatives charged with managing the airline should be doing so according to its shareholders wishes.

And based on Samoa’s response to COVID-19, Papalii believes Samoa prefers prudence over risk.

“These issues should be part of the budgetary process for Government.

“There was an allowance in the budget but no clear off balance sheet commitments by Government were revealed and this needs to be transparently made.”

Bg pattern light

UPGRADE TO PREMIUM

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?