Papua New Guinea’s state-owned Air Niugini (PX, Port Moresby) is to receive operational funding via Kumul Consolidated Holdings (KHC), the holding company of the country’s nine state-owned enterprises (SOEs).
The state aid for the airline was a portion of PGK50 million kina (USD14.2 million) transferred from the Motor Vehicle Insurance Ltd (MVIL), one of few SOEs in the country that was performing well financially, Prime Minister James Marape told local media. This followed a Cabinet decision that MVIL should support Air Niugini, which continued to struggle operationally due to the COVID-19 pandemic, he said.
“MVIL was posting substantial yields. KCH will support Air Niugini to ensure the airline is given enough input of liquidity to keep its operations running, as we sail past 2020 and hopefully, that should resuscitate its operations for a better 2021,” Marape said. “The business reform that is currently taking place in Air Niugini will ensure (that) it stands on its own feet and makes a profit again,” he added.
KCH Managing Director Isikeli Taureka said the funding would be allocated to Air Niugini following an evaluation. “We have established a transformation committee and will work out how to pay their existing creditors, how much for working capital, and how much for restructuring the balance sheet,” he said.
The latest state support follows a commitment by the government in November to invest PGK100 million (USD28.6 million) in the restructuring of Air Niugini. Funds for this are to be derived from a PGK1.65 billion (USD473.5 million) loan from the Asian Development Bank, of which the first PGK350 million (USD100 million) will be made available to the government next year.
The airline earlier this year drew on a PGK20 million (USD5.8 million) commercial loan to weather the downturn during the COVID-19 crisis.
