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Air Niugini suffering as financial impacts of coronavirus worsen

The international coronavirus crisis is continuing to have severe impacts on the national carrier Air Niugini, along with the rest of the business community, the Minister for State Enterprises, Mr Sasindran Muthuvel, said today.

“The impact it is having on our airline is also being felt right across the economy, including sectors such as tourism, hospitality and retail,” he said. “It is a very serious matter for all airlines and other businesses, worldwide and not only in Papua New Guinea.

“I am extremely concerned and saddened at the difficulties being experienced, especially in the case of Air Niugini. Its revenue has suffered from measures taken internationally to lessen the impact of the pandemic, and from its own responses to protect the health of Papua New Guineans, including cutting some international flight schedules.

“The airline has taken drastic action to reduce international flights to and from high-risk ports, and continues to comply with strict precautionary measures while processing international passengers. This is consistent with the Marape Government’s commitment to put the protection of Papua New Guineans ahead of all other considerations.

“At the same time as its revenue is declining, Air Niugini is taking every step necessary to ensure that as many domestic flights are available as possible. Protection of domestic services remains a priority.”

The Minister and Kumul Consolidated Holdings Ltd are considering ways to give Air Niugini a cash injection to make up for its loss of revenue, which is estimated at K12 million a month.

About K30 million will be required by the end of this month, and this will rise if further international travel restrictions and flight schedule cuts are imposed.

Despite the turnaround this year under the Marape Government, enabled by sweeping commercial decisions to stop flying on unprofitable routes, the airline has been unable to fully accommodate the adjustments forced on it by the coronavirus crisis.

“KCH and Air Niugini are working on a number of options to raise extra working capital,” Mr Muthuvel said. “The quickest partial solution is for the Government to settle its K23 million debt on the Falcon jet and for its sale to be completed at a realistic price. Given prevailing world economic conditions there has been a lack of interest in the aircraft and no firm offers have been made.”

Other options include short-term loans, debt refinancing and the sale and leaseback of property.

In the meantime, KCH and Air Niugini are monitoring international developments that might have further impacts on the airline’s revenue.

“To comply with the duty of care the Marape Government has to its citizens, Air Niugini has had to make painful decisions that have affected its financial health and there may be tougher decisions to come,” Minister Muthuvel said. “Now we must find the right medicine to restore the national airline.”