The government has shortlisted two companies from the pool of bidders seeking to operate Lulutai Airlines.
Prime Minister Dr ‘Aisake Eke confirmed this to Kaniva News this morning, following the government’s call for private ownership bids approximately three months ago.
It is understood that Fly Niu is among the companies shortlisted to operate Lulutai Airlines.
It is understood that a key factor in the negotiation process is the Retirement Fund loan, which amounts to about $6 million.
The loan was originally used to purchase the airline’s Twin Otter aircraft, and the government is now working to ensure that this debt is addressed as part of the privatisation deal, a source told Kaniva News.
The loan is being treated as a central issue in discussions with potential bidders.
The move to privatise Lulutai Airlines comes amid ongoing financial challenges, including the need for a $7 million subsidy earlier this year to keep the airline operational.
The government is also reviewing the airline’s legal status and transparency, with concerns raised over missing share certificates and the lack of annual financial reports.
The former Hu‘akavameiliku government borrowed approximately $6 million from the Retirement Fund, but faced strong criticism from the Opposition for failing to address the loan transparently and in a timely manner in Parliament.
Concerns were raised by civil servants, with Public Service Association Secretary Mele ‘Amanaki previously taking to Facebook to question what would happen to the loan if Lulutai Airlines ceased operations.
PM Eke previously told Kaniva News that the loan is guaranteed by the government and therefore secured. However, he acknowledged that the challenge lies in finding funding to cover the cost of the loan.
Former Prime Minister Hu‘akavameiliku previously informed the media that Lulutai Airlines had commenced repaying its debt to the Retirement Fund Board, which owns 27.19 per cent of the airline’s shares.
He stated that the airline had repaid approximately Tongan Pa‘anga $800,000 of its TOP 6 million loan.
At the time, he said the remaining balance—including principal and interest—stood at around TOP 5.7 million.
