The Eke government faces mounting challenges in its bid to privatize the national airline,
Officials are working out ways to help repay millions of dollars in loans from retirement funds and other government accounts, including an Australian grant allocated to the airlines by the previous administration, before any sale can proceed.
The controversial airline has been a point of contention since its inception in 2020, with critics warning it would plunge the government into debt, as happened with Royal Tongan Airlines, which collapsed with $30 million in debt after being forced to cease operations in 2004.
The Minister of Public Enterprises Piveni Piukala announced yesterday that the government is reviving the airline, ensuring its fleet becomes operational in an effort to cover costs and position the carrier for potential buyers.
He warned that if the government sold Lulutai Airlines in its current state, there would be no way to recover any costs, forcing a complete write-off, including the retirement funds loaned to the carrier.
The aircraft has received various investments, including $21 million from the government and extra funding from Australian aid.
Piukala has announced that Lulutai has recently applied for a quick government subsidy to assist its recovery efforts.
He argued that the subsidy would be less costly to taxpayers than leaving Lulutai to fend for itself.
“Hopefully by next week all three aircraft, including the Twin Otter, Saab 340 and Y12, will operate”, he said.
The Saab was immobile after striking a cement block in December last year while on wet lease, and the attempt to claim insurance had been stalled.
The Y12 was a gift from China, but it faced significant mechanical issues and stopped operating.
The Lulutai purchased the Twin Otter, which was commissioned in December 2023. It also encountered several mechanical issues.
The former Hu’akavameiliku government borrowed approximately $4.5 million from the Retirement Fund to purchase the Twin Otter.
Auditor reports
The Minister said the Auditor General’s report for 2022/2023 was expected to be released soon, which can assist the government in its final decision about Lulutai Airlines.
One issue that previously drew significant attention to Lulutai was last year’s revelation that the government did not own the airline, despite having invested over $20 million in it.
As Kaniva News previously reported, the Auditor General stated he could not locate the share certificate to prove government ownership of Lulutai.
“These certificates are to be completely kept and filed. They are to be consistent with the independent confirmations from the Ministry of Public Enterprises” according to its original Financial and Compliance Audits reports for 2020/2021 and 2021/2022, the Auditor General’s office made this comment on Lulutai Airlines.
“Audit issue still outstanding from previous years – No confirmation of government shares from the companies listed above. The Audit has no proof of the government ownership of these companies”.
Former Prime Minister Hu‘akavameiliku previously stated that the Ministry of Finance had received the certificate, but he did not respond to our request for a copy.
