The government is assessing the possibility of ceasing Lulutai Airlines services due to its inability to meet financial obligations, the Minister for Public Enterprises says.
The news follows serious concerns among public servants after revelations that Lulutai had borrowed millions of their retirement funds.
The Minister for Public Enterprises, Piveni Piukala, said Lulutai Airlines service was taking a nosedive (“meleuku”).
He said the government-sponsored company’s operation was “very cloudy”.
He also said the airline’s management has asked for $7 million to revive the company.
“In a scenario where there is no $7 million, the company must be wound up,” Mr Piukala said during a media briefing last week.
Piukala said that the biggest challenge they faced while reviewing Lulutai was that the previous governments had invested approximately $21 million in it.
He said he had just learned of a $10 million loan the airlines secured from the Retirement Fund Board.
He stated that out of the $10 million, $6 million was spent on the new Twin Otter, while $4 million was allocated for share purchases.
The Prime Minister said the government was reviewing the airlines to assess its financial viability.
PM Eke wanted to understand Lulutai’s operational capabilities, including assessing the staff to determine whether they possess the necessary qualifications.
The news follows revelations about civil servants’ concerns regarding their retirement funds and whether Lulutai Airlines could repay its loans.
Loan guarantee
Eke previously said in an interview with Kaniva News that Lulutai’s loan from the Retirement Fund Board might be secure because the government guaranteed it.
However, he was concerned about the airline’s lack of transparency and the allegations of associated financial losses.
He said that if Lulutai failed to repay the money, the government would need to reallocate funds from other parts of the budget, which would be a problem.
Lulutai Airlines has been controversial since its inception in 2020 by the Tu’i’onetoa government, in which most of the outgoing Cabinet Ministers were members.
Experts, including assessors from the IMF, said that airlines in the Pacific Islands are generally not profitable ventures, except for Fijian airlines, in which Qantas holds a 46 percent share.
Lulutai has been accused of providing poor service, failing to communicate effectively with customers, and not offering an online service for passengers.
If Lulutai were to be liquidated, it would become the 14th airline to be shut down in the kingdom.
