Fiji Airways had a bumper year in 2019, increasing its revenue, profit and passenger numbers despite high-priced fuel, foreign exchange fluctuations and increased competition from major shareholder Qantas, but 2020 saw the airline enter survival mode after the Covid-19 pandemic struck.
Group operating profit before tax for the year ended 31 December 2019 was up 17.8% to F$58.9 million ($27.6 million) from F$50 million in the previous financial year. Profit before tax increased 10.7% to F$61.2 million from F$55.3 million in 2019.
Over the same period, group revenue increased by 9%, from F$1.02 billion to F$1.12 billion, crossing the F$1 billion mark for the second consecutive year.
Passenger numbers rose by 2% “despite the significant impact of [our 46% shareholder] Qantas commencing flights from Sydney to Nadi in March 2019”. Fiji and its subsidiaries carried 1.7 million passengers in 2019, compared to 1.67 million passengers during the previous financial year.
The airline says it increased frequencies to “most destinations” in 2019 and completed its first full year of services to Tokyo. The airline concluded six new codeshare agreements with Alaska Airlines, Air India, British Airways, Finnair, Japan Airlines and Singapore Airlines, growing its network to 20 direct destinations, and increasing its total destination reach (including codeshares) from 69 to 108 destinations.
The global grounding of the Boeing 737 Max created “operating complexities” for the airline. To fill the gap left by the grounded Max, Fiji Airways had to wet-lease additional 737 NG aircraft and used larger A330s to maintain its schedule.
“The revenue losses and cost increases incurred as a consequence of the Boeing 737 Max grounding were significant, but I am pleased to announce that the company was successful in negotiating a settlement with Boeing,” managing director and chief executive Andre Viljoen says without going into further detail.
He adds that even before Covid-19, the operating environment was very challenging with many factors impacting profitability.
Despite that, it made major investments in its fleet, customer service and infrastructure during the year, including the acquisition of two brand new A350-900 XWB aircraft.
Moving into 2020, the Covid-19 pandemic has changed the market dynamic entirely and the airline is “now focused on survival”, says chairman Rajesh Punja.
“We are in the midst of the biggest crisis in the history of our industry, and we are focused on ensuring that Fiji’s national carrier not only survives this pandemic, but thrives in the post Covid-19 ‘new normal’ environment. No stone has been left unturned in our efforts to cut costs and preserve and bolster cash reserves, at a time when many airlines around the world are faltering,” he says.
“Even the largest and most profitable airlines have turned to financiers and governments for assistance. Fiji Airways is grateful for the support of our financiers who have supported us with new loans, our lessors who have offered aircraft rent payment deferrals, and of course the Fijian government for approving a sovereign guarantee scheme to support our financing actions.”
Fiji cites “growing consensus in the aviation industry, supported by IATA,” that the “new normal” level of travel demand will be 70-80% of pre-Covid-19 levels.
Punja says: “It is obviously important to be nimble, and to take the expected ‘new normal’ levels of demand into account when planning for the future. Simply put, future revenues will likely be significantly lower than pre-Covid-19 levels. Fiji Airways, like other prudent airlines, is already implementing steps to align with this future expectation.”