PNG Air Releases 2019 – 23 Audited Accounts, Details Impact of Covid

PNG Air has released its first audited accounts in almost five years. Last week, the listed Papua New Guinea Stock Exchange company quietly released its audited accounts for the 2019 – 2023 financial years after years of delays while restructuring operations and reorganising its financial affairs. The airline finalised its accounts in June.

The report shows PNG Air posted a before tax profit of PNK10.54 million (USD4 million) in the 2019 Papua New Guinea financial year, which aligns with the calendar year. However, the airline hit the financial skids the following year following the onset of Covid-19, posting a pre-tax loss of PGK79.56 million (USD30.1 million) in the 2020 financial year.

In fiscal 2021, PNG Air lost PGK35.9 million (USD13.6 million) before taxes. In the twelve months to December 31, 2022, it posted a pre-tax loss of PGK77.4 million (USD29.3 million). However, with Covid-19 now in the rear view mirror, PNG Air posted a turnaround pre-tax profit of PGK72.3 million (USD27.3 million).

“Covid-19 pandemic profoundly impacted our business,” PNG Air Chairman Augustine Mano wrote in last week’s report, adding that the pandemic placed significant strain on the company’s financial position.

After Papua New Guinea’s competition agency, the Independent Consumer and Competition Commission twice rejected proposals for Link PNG (a subsidiary of state-owned Air Niugini) to buy a minority stake in PNG Air and provide some desperately needed capital, PNG Air initiated a creditors’ restructuring scheme in 2022  to address liquidity challenges arising from the pandemic and the broader economic downturn.

In December 2023, the National Court approved PNG Air’s Scheme of Arrangement under Part XVI of the Companies Act 1997, which took effect immediately.

The scheme allowed PNG Air to restructure its debts with major creditors - a priority that had been central to the board and management's focus.

Major creditors agreed to materially reduce PNG Air’s debt and its key shareholders, Mineral Resources Development Company Ltd and the National Superannuation Fund Limited, committed new capital to strengthen the airline. Smaller creditors and employees were paid in full.

A PGK55 million (USD20.8 million) capital injection from Mineral Resources Development was critical in turning around PNG Air financial fortunes.

As a result of its restructuring, the airline recorded a one-off gain of PGK110.5 million (USD41.8 million) through the reduction of its debt obligations. PNG Air’s return to profitability was primarily because of the debt restructure, which was largely due a reduction in lease costs.

“The restructure has placed PNG Air on a more stable financial footing, and while challenges remain, this outcome marks an encouraging step forward in our recovery journey,” adds Mano.

The chairman says 2024 posed further challenges, notably a national fuel crisis and fuel rationing measures that affected payloads and reduced flights.

However, despite these difficulties, PNG Air says it is finalising its 2024 financials with audits targeted for completion by year-end.

Mano says in the future, PNG Air will focus on completing its fleet modernisation strategy to reduce maintenance and operating costs; strengthening the balance sheet through disciplined financial management and diversified revenue streams, and prioritising safety and on-time performance to rebuild full trust with the traveling public.

PNG Air is Papua New Guinea’s second largest scheduled passenger airline (after Air Niugini). It flies to 23 domestic destinations with its fleet of 14 aircraft, which include eleven 36-passenger DHC-8-100s (Dash 8s) and six 72-passenger ATR72-600s.

PNG Air's remain suspended from trading on the Papua New Guinea Stock Exchange.

Photo: PNG Air