PNG Air Plans Multi Million Capital Raising
PNG Air will ask shareholders to approve a PGK20 million (USD4.84 million) capital raising at a special meeting of shareholders to be held in Port Moresby on September 22, 2025. The funding will help pay for new ATR72-600 aircraft.
The notice to shareholders, along with documentation shown to potential investors, was filed with the Papua New Guinea Stock Exchange on September 8.
The privately owned carrier, Papua New Guinea’s second largest airline, wants to retire its “aging and unreliable” Dash-8 aircraft, and replace them with “more reliable” ATR72-600.
“In the last 24 months, the airline has invested significantly to rebuild its core capabilities and culture,” the investor presentation notes. “Whilst significant progress has been made, in challenging market conditions, the airline now requires additional capital to support the growth in scale and return to profitability.”
It wants shareholders to approve the issuance of up to one billion new ordinary shares at a price of PGK0.02 per share. Currently, PNG Air has 8,287,544,748 ordinary shares on issue.
“Existing shareholders will experience dilution of their current shareholding percentage if they do not subscribe for the new shares,” the filing reads. “However, the board believes that the long-term benefits of the capital raising, including enhanced company value and growth prospects, will outweigh the immediate dilution effects.”
The airline will give preference to existing minority shareholders and, after that, new investors. Majority shareholders, state-owned investment company Mineral Resources Development Company and superannuation company, Nasfund, will not take part.
There will be conditions attached to the issue and current majority shareholders, state-owned investment company Mineral Resources Development Company and superannuation company Nasfund, will not participate. All other shareholders are deemed minority shareholders.
The minimum investment for existing shareholders is PGK5,000 (USD1,210). The airline will require new investors to tip in at least PGK250,000 (USD60,500), putting them in the sophisticated investor class.
New funds to fuel growth
In addition to acquiring new aircraft, PNG Air will use the funds to grow its market share across domestic and regional routes, invest in operational infrastructure, and strengthen its balance sheet.
The airline, which remains suspended from trading on Port Moresby bourse after entering a scheme of arrangement in 2023, recently filed five years’ worth of audited annual reports. It says it is now on a more “stable footing” and is ready to grow the fleet and market share.
PNG Air’s operations are currently constrained by the Dash 8s, according to the investor presentation. The six existing DHC-8-100s vary in age between 38.5 and 41 years. The airline intends to sell them. Most are now inactive. The sale proceeds will help fund turnaround initiatives and growth.
PNG Air also has six existing ATR72-600s. Two of those are presently subleased to Air Moana.
Currently, PNG Air has a 15% domestic market share and seven operational aircraft that fly an average of 4.4 hours a day. In the 2024, the airline that translated into 60 million passenger kilometres flown and revenues of PGK261 million (USD63.2 million).
It is targeting a 41% market share using eleven aircraft flying around 6.4 hours per day by the end of the 2027. This outcome will see annual passenger kilometres flown increase to 288 million and revenues jump to PGK465 million (USD112.5 million).
In what it terms its turnaround and rebuild phase, PNG Air wants to be rid of the Dash 8s by the end of 2025, add three to five ATR72-600s to “improve lift and service,” increase market share to make the airline more competitive with Air Niugini, and enlarge its charter business, which includes ad hoc charters and fixed term fly-in-fly-out work for mining and resource companies.
“The (ATR) aircraft leases have been signed and are awaiting the onboarding of the new aircraft,” the presentation reads, adding that the airline expects to take delivery of one of those planes in December 2025 and the remaining two in March 2026.
PNG Air also says it will optimise operations by effective cost management, securing supply chains, improving regulatory compliance, and focusing on a strong workplace culture and crew capacity.
The airline also told prospective investors that it will soon complete the 2024 financial audits and apply for its trading suspension to be lifted thereafter.
Assuming shareholders approve the proposal, the airline will issue the new shares within three months of September 22.
You can read PNG Air's stock exchange filings here.
Photos: PNG Air.