Sayed-Khaiyum: Fiji Airways has reduced recurring monthly costs

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Attorney General and Minister for Economy Aiyaz Sayed-Khaiyum during a parliament sitting. Picture: RAMA/FILE

Fiji Airways was able to reduce recurring monthly costs from $38 million a month to $20 million by taking swift and effective cost-saving measures.

This was the word from Attorney-General Aiyaz Sayed-Khaiyum in Parliament yesterday while delivering on the national carrier’s financial position.

He said beginning February this year, steps were taken to reduce costs, preserve cash and bolster the cash reserves with many financing activities to ensure the airline survived the COVID-19 pandemic and “thrives once again when border restrictions actually ease up”.

“We will explain some of it today (yesterday) to put a definitive end to the unfounded political speculation on the airline’s financial position,” the A-G said.

“Fiji Airways’ recurring monthly fixed costs on 1 April 2020 was Fijian $38 million comprising primarily of aircraft ownership and lease cost of Fijian $24.5 million, employee payroll cost of Fijian $7.5 million, and insurances property rentals et cetera of Fijian $6 million.

“The ongoing cost savings and cash preservation initiatives including aircraft loan and rental payment deferrals have progressively reduced the monthly recurring fixed costs by August 2020 to around Fijian $20 million until June 2021.

“Urgent ongoing steps and measures were taken from early March 2020 to save costs and preserve cash.

“Further steps were implemented regarding employees on 25 March 2020, these include the early return of leased aircraft — negotiations are in process with the lessors for the early return of the two Airbus A330-200 aircraft as well as one Boeing 737-800 aircraft.”

Mr Sayed-Khaiyum said other initiatives taken included insurance premium adjustment and deferral which resulted in a discount of 35 per cent, reduction and deferral of property rentals until December 2020 and supply and payment deferrals and reduction in charges.

The A-G also said all non-essential projects had been frozen and the airline had reduced employee costs with eight expatriate executives terminated “with only five remaining and the CEO” — with all expats hit with a 30 per cent pay cut.

He said all 79 expat pilots had their contracts terminated, 51 per cent of employees who had not worked from May 25, 2020, had their employment terminated and all retained employees had a 20 per cent pay cut from June 1, 2020.

“And last, retained employees are rostered to work within two to five days per week and are only paid for actual days worked.”

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