Gov’t debt exposure on Fiji Airways climbs to 9.5% of GDP

By Andrew Curran.

Fiji Government’s debt exposure to majority state-owned carrier Fiji Airways is approaching 10% of the country’s gross domestic product, according to Finance Minister Esrom Immanuel.

The minister made the comments during an August 17 parliamentary session that passed a motion to guarantee FJD200 million (USD90.7 million) in loans to Fiji Airways until their full maturity or discharge, as well as exempting the airline from paying the usual guarantee fee.

The additional guarantees were requested by Fiji Airways.

Immanuel told parliament that Fiji Airways was a critical national asset that played a “pivotal role” in supporting the country’s connectivity and tourism industry. The airline carries around 70% of all passengers to and around Fiji. The Fiji Government has a 51% shareholding in the airline.

“The government recognises the significant challenges currently facing Fiji Airways,” the minister said.

Fiji Airways’ fuel bill blows out

According to the minister, FJD123 million (USD55.8 million) will be used to replace cash currently restricted as collateral for standby letters of credit, while the remaining FJD77 million (USD34.9 million) will be used as working capital and to help pay the carrier’s fast-rising fuel bill.

Fiji Airways’ fuel bill blew out by around FJD130 million (USD59 million) in the second quarter of 2026 following the start of the Iranian War.

“(The) airline needs the money to deal with immediate cash-flow pressures,” Immanuel said. “Aviation fuel is now Fiji Airways’ single largest operating cost and is placing material pressure on working cash flow… The financial pressure on the airline is compounded by debt obligations from the Covid period.”

But the guarantee increases the government’s guaranteed exposure to Fiji Airways’ debt from FJD1.1315 billion (USD513.1 million) to FJD1.3315 billion (USD608.3 million), or 9.5% of Fiji’s gross domestic product.

However, Immanuel said access to government guarantees would allow Fiji Airways to approach its financiers on a more credible basis and secure funding on terms “materially better than would be available on an unsecured basis.”

Government proactive in assisting Fiji Airways

Given its importance to the national economy, the Fiji Government has swung behind Fiji Airways since fuel prices started rising earlier this year.

In the 2026/27 budget, the Fiji Government extended Fiji Airways’ loss carried forward provisions from eight to 15 years and waived fees and charges over the next 12 months amounting to approximately FJD10 million (USD4.5 million).

Fiji Airways will also trouser the proceeds of a 5% tourism tax added to accommodation charges at hotels and tour operators turning over more than FJD70 million (USD31.7 million). However, the minister says the tax is only valid for 12 months from September 1.

Minister says willingness to help is not limitless, even is Fiji Airways is a good credit risk

Immanuel acknowledged the airline’s “strong repayment history and management of debt” but said that the government’s willingness and/or ability to support Fiji Airways is not limitless. He said Fiji Airways was now obliged to produce a detailed action plan showing how it intended to strengthen its financial position moving forward.

Fiji Airways’ most recent audited financial report, covering the 12 months to December 31, 2024, revealed that the airline posted an audited consolidated loss of FJD25 million (USD11.3 million). However, Immanuel told parliament that the airline’s unaudited loss for the 12 months to July 31, 2025, was FJD40.3 million (USD18.3 million) – a figure not previously disclosed, albeit one that remains subject to auditing.

The minister said the action plan would focus on cost-reduction measures, operational efficiencies, revenue-enhancement initiatives and divestment of non-core assets such as hotels, among other things.

“Fiji Airways remains one of Fiji’s most important infrastructure assets,” Immanuel said, adding that the airline has never turned to the government to honour its previous guarantees.

Photo: Fiji Airways.
Contact the writer: andrew@aerosouthpacific.com