We cannot imagine the anger Unit Trust of Samoa (U.T.O.S.) investors must have felt when they read the front page article in the Friday 10 December 2021 edition of the Samoa Observer.

The headline told the story of a bankrupt State-owned airline, which relied on loans guaranteed by the Human Rights Protection Party (H.R.P.P.) government, whose decisions over the years in relation to the operations and management of Samoa Airways has always been veiled in secrecy.

Today that lack of accountability by the previous government has come back to haunt the very people who played no part in making that decision – the U.T.O.S. investors who now have to contend with the fact that $33 million of their funds were used as loans to prop up a State-owned airline that has been in financial strife for extended periods of its existence as an airline.

So how do the U.T.O.S. investors get a return on their investment from a $33 million loan to a company that is now in a state of insolvency?

Answering the question would have been frustrating as the investors initially believed that the investment of their hard-earned tala in the State-run U.T.O.S. would have earned handsome profits for them and their families. 

The article (Public investors’ funds loaned to insolvent airline “in crisis”) revealed details of a U.T.O.S. Loan Assessment report relating to loans of up to $45 million, which was to be disbursed to the airline over two years with the government the sole guarantor.

The report showed that U.T.O.S. was willing to direct Samoan investors’ money into the airline despite the fact that it was in a state of “technical insolvency”. Of the total of $45 million in approved loans, a sum total of $33 million was disbursed while the remainder of the fund was put on hold by the Cabinet while it reviewed the future of the airline, the report noted.

A third loan approved for the national carrier in April 2021 was released in tranches with conditions attached that are similar to the previous loans. According to the report, over the last three years the U.T.O.S. has approved $15 million in May 2018, $15 million in April 2019 and $3 million in November last year before the Cabinet intervened.

But why should the U.T.O.S. approve the loans when Samoa Airways has been unable to declare profit in recent years nor given any indications that it will prioritise profitability over revenue growth and embark on cost measures including staff layoffs, pay cuts and fleet restructuring including the cancellation of leases?

We note that the U.T.O.S. and the Ministry of Finance (M.O.F.) finally acted to get the airline to rethink its operations and recommended the delivery of the leased Boeing 738-800 be further delayed, both entities compelled by the global economic meltdown triggered by the COVID-19 pandemic in early 2020. 

However, weren’t we already seeing the signs of an airline in a quagmire of financial indebtedness, even before the advent of the coronavirus?

In fact a couple of months after the airline’s inaugural flight to Auckland, New Zealand in November 2017, Samoa Airways had already recorded a $2 million loss according to a Cabinet Minister.

In August this year a Ministry of Public Enterprises report pointed to an operating loss of over $37 million recorded by the airline with liabilities exceeding the sum total of its assets by over $17.5 million.

And we’ve had other reports between 2018 and this year that highlighted the poor state of the airlines’ finances and warranted the intervention of the Government-of-the-day to make a call on the viability of leasing a narrow-body aircraft.

But the previous administration and its leader Tuilaepa Dr. Sa'ilele Malielegaoi in its last four years in public office downplayed and ridiculed efforts by this newspaper to bring these issues to his government’s attention.

When this newspaper first published details of the $2 million tala loss in the airline’s first four months of operation, the then Prime Minister Tuilaepa said: “This great airline of Samoa has only started in four months and the Samoa Observer writes a stupid headline based on ignorance,” he said, adding that the airline is going through the same phase the “stupid editor” went through when “he was a baby.” 

“When he was just born, he rolled on his stomach, after sucking his big toes, the same toes that began to grow later, then he walked and then ran.” 

Oh well sir, but your baby has cost this nation millions of tala in public funds over the last four years with nothing to show for! He has been crawling all along and never made an attempt to get up and walk and later run! 

On top of being a financial liability and burden to the nation, the decision by the last government to prop-up Samoa Airways could now cost U.T.O.S. investors $33 million, which the airline is clearly not in a position today to recoup due the current global aviation environment brought on by the pandemic.

So who will be held responsible for that investment decision by the U.T.O.S. management at that time to support Samoa Airways?

We note with interest the opposition leader criticising the decision of the Fa’atuatua i le Atua Samoa ua Tasi (F.A.S.T.) Government on Thursday over its decision to abandon the Boeing 738-800 lease which will now cost the country $180 million tala.

It is tragic that after 23 years of heading Samoa’s government, the veteran politician is yet to appreciate the value of living within one’s means and avoiding white elephant projects, which will not add value to citizens’ lives and only increase government debt.

His former governing party and its leadership and members owe an explanation to U.T.O.S. investors.