Fiji Airways Announces Further Measures Due to COVID-19 Crisis

National carrier to raise debt finance and reduce workforce to ensure survival

Fiji Airways, Fiji’s national airline, has today announced workforce adjustments as a consequence of the current and foreseeable operating environment. The adjustments are necessary and unavoidable as the COVID-19 crisis endures, causing the further suspension of scheduled international services and ensuring that the airline will receive virtually zero revenue in the coming months. Fiji Airways is also negotiating with its lenders and aircraft lessors for loan and lease payment deferrals, and arranging debt finance from a number of financial institutions.

Mr. Andre Viljoen, Fiji Airways Managing Director & CEO, said: “This is a very difficult announcement, and one we are only making after exhausting all other options. The sad reality of prolonged flight suspensions means that we simply do not have work for a large segment of our workforce now, and for the foreseeable future. We have no other option but to terminate the employment of staff to whom we cannot provide work, which is an unfortunate but vital step we must take in order to protect our cash position and to preserve as many jobs as possible for those staff who the business needs in order to function today.”

Fiji Airways has recently extended the suspension of international flights through to the end of June, and is in the process of reducing scheduled flights for July and August.

Mr. Viljoen added: “When the first flight suspensions were announced in March 2020, we implemented a series of actions aimed at tiding us through the April to June period, in the hope that the crisis would abate and some level of demand would return. Most of our workforce agreed to a temporary 30-35% pay reduction. However, regrettably, all of our international passenger services remain suspended, and it is simply not sustainable to continue to pay staff who are at home and not working, even at reduced salary levels. We have a responsibility to our shareholders, and to the Fijian people, to ensure that Fiji Airways survives this crisis.”

In order to ensure the airline’s survival, given its critical and strategic importance to the Fijian economy, the following workforce measures have been implemented:

• Eight expatriate executives have had their employment terminated, with five expatriate staff remaining, including the CEO. The airline has six local executives, who will all retain their jobs and now constitute the majority of the leadership team. The responsibilities of the remaining executives and management have been expanded to absorb the work of those terminated.
• All 79 expatriate pilots have had their contracts terminated.
• 51% (758) of employees from across the Airline Group who do not have work today or in the foreseeable future have had their employment terminated. They will be paid a minimum notice period of 1 month (despite most employees having a two-week notice period), plus any accumulated leave and other entitlements.

Mr. Viljoen explained: “These employee terminations are based on work available today and for the foreseeable future. These decisions have been carefully considered, and we have retained staff in operational areas who have critical skills, training and experience, including those who are required to carry out ongoing aircraft maintenance programmes, as well as all regulatory and safety-related post-holder positons as per Civil Aviation Authority requirements.  There is, of course, a minimal level of staff required in non-operational areas of the business in order to keep it functioning.  In all areas, we have retained staff based on objective and fair criteria such as performance, disciplinary record, and aptitude for the role.”

A 20% permanent salary reduction has been implemented for all retained employees effective 1 June 2020. In the short term, retained staff will work between 2-5 days per week, and will only be paid for actual days or hours worked. Employees will be permitted to utilise annual leave days on days not worked, in order to ‘top up’ their weekly pay.

These workforce reduction measures will result in a circa 50% reduction in the Company’s payroll cost base.

Mr. Viljoen concluded: “Many of our dear colleagues affected by these reductions have contributed enormously to our airline over many years, and we owe them a huge debt of gratitude. The measures we have announced today are painful and difficult, but ultimately necessary for our airline’s survival. Tourism is the backbone of the Fijian economy, and it is dependent on a strong and sustainable national carrier. Fiji Airways will be vital in leading Fiji’s economic recovery post COVID-19, and we take that obligation to the Fijian people very seriously. We have taken these difficult actions now, in order to safeguard our airline’s future. Many large and respected airlines around the world are collapsing as a consequence of this unprecedented crisis. However, we will do everything within our power to ensure that Fiji Airways does not suffer the same fate.”