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27 May, 2020

Fiji Airways saved by government after terminating more than half of its staff

Fiji Airways aircraft shown moments before landing at the Los Angeles International airport, LAX.

Fiji Airways has been handed a lifeline by the country’s government, after being forced to take some “painful” measures to survive the COVID-19 pandemic.

The carrier revealed earlier this week that it had secured “vital support” from the Fijian government in the form of sovereign guarantees to support urgent financing actions required to tide the company through the COVID-19 crisis, and the expected slow ramp-up of travel demand thereafter.

The sovereign guarantees will be issued by the Fijian government in support of FJ$450 million ($305.6 million) worth of initiatives aimed at bolstering the airline’s cash reserves, including payment deferrals, and new long-term debt financing.

The bulk of Fiji Airways’ international services have been cancelled through to the end of June 2020, with further reductions expected in July and August.

Andre Viljoen, CEO and managing director of Fiji Airways, said: “We are extremely grateful to the Fijian government for standing behind Fiji Airways and providing these guarantees, without which these financing initiatives would not be possible, and Fiji Airways would not survive.”

The government support arrives not long after Fiji Airways announced a number of reductions to its workforce as a consequence of the current environment.

Eight of the airline’s expatriate executives have had their employment terminated, with five expatriate staff remaining, including Viljoen. Fiji Airways has six local executives, who will all retain their jobs and now constitute the majority of its leadership team.

The responsibilities of the remaining executives and management have been expanded to absorb the work of those terminated.

All 79 of Fiji Airways’ expatriate pilots have had their contracts terminated, and 758 of its employees from across the company have had their employment terminated.

A 20 per cent permanent salary reduction has been implemented for all retained employees at Fiji Airways, effective 1 June 2020.

In the short term, the airline’s retained staff will work between two and five days per week, and will only be paid for actual days or hours worked. Employees will be permitted to utilise annual leave days on days not worked in order to top up their weekly pay.

Fiji Airways estimates these new measures will result in a cost reduction of approximately 50 per cent.

“Many of our dear colleagues affected by these reductions have contributed enormously to our airline over many years, and we owe them a huge debt of gratitude,” Viljoen said on Monday.

“The measures we have announced today are painful and difficult, but ultimately necessary for our airline’s survival.”

Featured image: iStock/Angel Di Bilio

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