Positive news from Samoa Airways but what are the future plans?

By The Editorial Board 19 June 2024, 10:00AM

There were a few tragedies over the weekend. There was also positive news to start the week. One such positive news was that Samoa Airways debt now stands at $7 million.

This is after the airline cleared $78 million in over a year. At the beginning of 2023, the airline owed $85 million.

This is a remarkable feat for the Chief Executive Officer (C.E.O.) of Samoa Airways Fauo'o Fatu Tielu and his team. Samoa Airways which started as Polynesian Airlines was always struggling and has had its fair share of controversies.

We have seen how mismanagement once threatened the very existence of the company. It is good to know that the finances of the national carrier are being managed well. This is a positive sign as this guarantees employment for the more than 100 staff of the airline.

This also means that if the government provides a little more assistance to the airline, we could look at investing in more planes and perhaps grow the airline. The company has already sent a Twin Otter to Canada for retrofitting.

From the pictures that have been published of the work on the aircraft, it looks like a complete overhaul. The company does need new aircraft. Most of the craft are over four decades old, although still operational, there is a safety risk.

Fauo'o confirmed to the Samoa Observer on Sunday that the company is coping well after millions of debt owed to non-governmental and governmental agencies for years.

He explained that this does not include their operations debt. As for the $7 million owed to several agencies, the company is seeking help from the government to pay off that amount so they can focus on their operational debt.

The current debt is about $7 million excluding the airline's operational debts. The airline hopes the government would bail them out again with the $7 million and then they would be in a better position to cover the almost $8 million operational debt.

The airline is seeking government assistance but everyone else is as well. The faster the airline can clear its debt, the faster investment can be made. However, one of the fundamental principles of any investment is risk.

It is good that the debt has been paid by not taking any extra risk but this creates a situation where the industry is not growing at the pace of other airlines in the region. Fiji Airways took a risk during COVID-19 and just this year they announced a major profit of more than FJ$170 million with all staff getting a bonus of FJ$5,000 each.

Samoa sold its 737 aircraft and Fiji Airways has taken over the Apia-Nadi route flying almost seven days and week and has now started the Honolulu-Apia service.

Air Vanuatu became insolvent and will be liquidated soon. Air Vanuatu cancelled its flights on May 9, calling in the administrators the following day. The small carrier was USD73,505,247 in debt and unable to finance its operations.

Nauru Airlines which recently purchased two to three jet aircraft is looking to take over flight routes out of Vanuatu. The Nauru government has always backed its airlines. That is why it has been a success and so has the Fijian government.

Maybe, the government could do a bit more and revive the airline industry. We already have prudent management, let us see what this management can do with investments and risks. Newer crafts, even smaller ones, can lead to more local flights and more flights between the two Samoas.

There could be a possibility of venturing into Tokelau and the Cook Islands. That is if the airline is ready to take a risk. Or it can stay risk-free and continue to pay debt until then there is no debt left. Until that is achieved, there will be no major profit.

By having a bigger aircraft and servicing the New Zealand routes, Samoa Airways can bring in more tourists, and lower airfares for its people who are flying at high costs to New Zealand.

Paying off a large debt is a good sign and we are hoping that this would lead to investment. The idea is not just to break-even but to make profits and ensure growth. If Samoa has a healthy growth, so will this nation.

By The Editorial Board 19 June 2024, 10:00AM
Samoa Observer

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