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Record F$84.5M profit for Fiji Airways

Tatiana Rokou - 17 March 2017, 00:11

This is a fantastic result, as Fiji Airways Group recorded another year of growth in reported profit.

The Fiji Airways Group achieved its biggest pre-tax profit ever during the fiscal year that ended December 31, 2016, a total of F$84.5 million. The Group (legally known as Air Pacific Limited) comprises Fiji Airways, Fiji's national airline; its subsidiaries Fiji Link & Pacific Call Comm. Ltd; and a 38.75% stake in the Sofitel Fiji Resort & Spaon Denarau Island. Most notably, profit before tax increased by 20.5% over the prior financial year.

Results' Highlights:

  • Group revenue was F$825.3 million compared to F$815.3 million for the prior year ended 31st December 2015.
  • Group profit before tax was F$84.5 million compared to F$70.2 million for the prior year ended 31st December 2015.
  • Group carried 1.4 million passengers compared to 1.3 million for the prior year ended 31st December 2015.
  • Group is well ahead of the FNPF repayment schedule for the Airbus A330 loans.
  • Profit shares for both management and non-management employees were increased by approximately 20% each.

Mr. Andre Viljoen, Fiji Airways Managing Director & CEO, said: "This is a fantastic result, as we record another year of growth in reported profit. This strong performance is a true testament to the tremendous work done by our team, responding strongly to the challenges we faced. I am most thankful to our Chairman, Mr. Rajesh Punja, and the Board for their guidance and support, and to every Fiji Airways Group team member for their dedication and efforts.

"Last year was full of milestones achieved, culminating in the largest profit the airline has ever recorded. To achieve these results is nothing short of outstanding - in a year when we had the most devastating cyclone in our nation's history slow down tourism and the launch of three new international routes.

"The result would also not have been possible without the backing of the Fijian Government and the Fijian people, who continue to stand by us. I especially thank our Prime Minister, the Hon. Voreqe Bainimarama, and our Line Minister, the Hon. Aiyaz Sayed-Khaiyum, for their vision and unwavering commitment to the national airline."

"We are proud of these excellent financial results, but we take particular pride in the fact that the increased profit is a sign of excellent leadership, a healthy and positive airline culture, and a constant improvement in service at all levels," said the Attorney-General. "These factors will take us well into the future as we build Fiji Airways into a top, full service carrier."

"The financial results and other accomplishments also show what government and state-owned entities can do together when government has a strong and focused vision and establishes a proper operating environment, and then lets management do what it is supposed to do as a commercial entity. Fiji Airways is showing that with a management focused on merit-based recruitment, high standards of service delivery, airline safety, and a partnership approach to workplace relations, any state-owned entity can achieve its true potential and beyond. Fiji Airways is the only state-owned enterprise which shares its profits with all its employees," said the Attorney General.

The airline reports that yields were under pressure throughout the year from the increased capacity of its competitors, discounting of airfares by competitors that had taken advantage of lower fuel prices, and the disruptive effects of February's Tropical Cyclone Winston. Fiji Airways led actions after the cyclone to re-invigorate travel demand by significantly discounting its airfares, which cost the Company in excess of $40m in lost revenue. However, these actions by Fiji Airways are largely responsible for Fiji's tourism growth of 5% experienced in 2016.

Based on the PwC audited financial statements for 2016, the Group has announced the following profit-share and management-bonus arrangements:

  • All eligible non-management staff of Fiji Airways and Fiji Link will receive a profit-share payout of F$4,000 each, approximately 20% higher than 2015, subject to tax and superannuation deductions as required.
  • All eligible Fiji Airways and Fiji Link managers will receive a management bonus of no less than $9,000 each, approximately 20% higher than 2015, subject to tax and superannuation deductions as required.
  • This is in addition to bonuses of up to $1,200 per year that non-management staff of Fiji Airways and Fiji Link already stand to earn for achievement of key objectives.

The airline's restructured Leadership Team, which now comprises three Fijian Executive General Managers, contributed to the airline's numerous 2016 achievements. These include:

  • Launch of new routes to Singapore, San Francisco and Vava'u (Tonga).
  • Increased frequencies to Hong Kong from three to five flights a week, and seasonally increased frequencies to Auckland, Apia, Christchurch, Los Angeles, Sydney, Nuku'alofa, Funafuti, Savusavu, Taveuni and Kadavu.
  • Concluding a ground-breaking package deal for five new Boeing 737 MAX 8 aircraft, arriving in 2018 and 2019. The deal, which followed a rigorous, thorough and transparent process, represents excellent value for Fiji Airways and stakeholders.
  • Start of operations using the new A330-300 aircraft on long-haul routes, offering a Quiet Zone and Extra Legroom product for guests.
  • Hiring 27 additional pilots and 82 new Cabin Crew to cater for increased operations.
  • Undertaking a major onboard product refresh, including inflight entertainment, meals, wines, welcome cocktail and mocktail, and Business Class amenity kit.
  • Designing a new world-class lounge at Nadi International Airport with capacity for 200 guests, to be opened mid-2017.
  • The launch of the UP! Your Service programme led by world-renowned expert Ron Kaufman, to develop and form a new service culture. All Fiji Airways team members are attending a two-day 'Achieving Superior Service' workshop to develop a common service understanding and language and to improve service to customers and colleagues.
  • Introduction of a Premier Services Team at its home bases of Nadi and Suva International airports, offering concierge services to our VVIP guests.
  • Improving the Tabua Club membership programme with a dedicated new team.
  • Completion of a Skytrax audit to identify service and product improvements to move from a 3-Star to 4-Star airline rating.
  • Achieving the IATA Operational Safety Audit (IOSA) accreditation for Fiji Link.
  • Strengthening the codeshare agreement with American Airlines, connecting to 38 destinations in the United States, and finalising a new interline agreement with Jetstar Asia, connecting to more than 21 destinations in South East Asia.
  • Launching a state-of-the-art aviation academy in Nadi for pilot training, complete with aircraft simulators for both Boeing and Airbus aircraft. This academy will offer ab-initio pilot training for pilots from Fiji and the Pacific region.

Mr. Viljoen further stated: "2017 will be another busy year as we've set bigger, even more ambitious goals for ourselves. This year we are targeting many further service improvements to attain the highly prized 4-Star Skytrax rating during 2018. We are increasing our focus on Singapore with a dedicated new Sales team in place and a codeshare partnership with Jet Airways to target more Indian travellers."

"We will fly directly between Nadi and Adelaide from June, further extending Fiji's reach into its biggest tourism source market. San Francisco will be extended to a year-round service, providing increased tourism growth opportunities from mainland USA. We are constantly looking to add value to Fijian tourism and the Fijian economy. We are further reinforcing our pilot progression plan, and future pilot recruitment for Fiji Airways will be through Fiji Link."

Mr. Rajesh Punja, Fiji Airways' Chairman, said: "The Board welcomes another strong financial performance. The result speaks for itself, and we must acknowledge the leadership of Andre in delivering this. In just fifteen months at the helm, Andre and his Leadership Team have taken Fiji Airways to another level in terms of network growth, product improvements and service enhancements, while introducing numerous efficiencies and increased fiscal discipline. I would also like to thank my Directors for their invaluable contribution to the Company."


 

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