[Photo: File]

Fiji Airways is facing a $130 million surge in its fuel bill, putting further pressure on the airline’s finances.

The government has approved an additional $200 million guarantee to help the national carrier manage the rising fuel costs.

Finance Minister Esrom Immanuel said the increase was part of what the government describes as Fiji Airways’ biggest fuel shock in more than 50 years.

He states that the current aviation fuel crisis is not normal price volatility and has placed significant pressure on the airline’s finances.

Immanuel says the additional guarantee will strengthen Fiji Airways’ liquidity and help it continue operating while managing higher fuel costs.

About $123 million of the guarantee will replace cash currently restricted as collateral for standby letters of credit.

The remaining $77 million will support revolving working-capital facilities and help the airline manage elevated fuel costs.

Immanuel says Fiji Airways cannot afford to wait several months for support while facing the current financial pressure.

Tourism Minister Viliame Gavoka says Fiji Airways remains critical to the tourism sector because of its role in maintaining international and domestic connectivity.

Gavoka says Fiji has already exceeded one million visitors on a rolling June-to-June basis. He says the country is on track for what could be its strongest tourism year.

He says Fiji Airways has made difficult cost-cutting decisions, including reducing catering costs, instead of cutting flight capacity.

Gavoka says the airline’s decision to maintain services has become more important following Air New Zealand’s withdrawal of services to Fiji.

Opposition MPs supported the guarantee but questioned whether Fiji Airways had done enough to protect itself from fuel-price volatility.

Faiyaz Koya says fuel volatility is a known risk in the airline industry. He questioned whether adequate risk-management and fuel-hedging measures were in place.

Koya says the airline must also review its wider expenditure, revenue management, routes and operational structure.

He raised concerns over Fiji Airways  planned withdrawal from the Dallas route from September 6. He questioned whether some routes remain commercially viable as operating costs rise.

In response, Immanuel says route rationalisation and a focus on profitable routes are already being addressed under Fiji Airways’ five-year profit plan.

He says the airline is targeting a return to sustainable profitability in 2027.

The government has also extended Fiji Airways’ tax-loss carry-forward period from eight to 15 years. It has waived about $10 million in fees and charges over 12 months.

A temporary five percent tourism services levy is expected to generate about $70 million for the airline.

However, the government says its capacity to provide further financial support is limited.

The $200 million guarantee is not an immediate cash payment to Fiji Airways. It allows the airline to borrow using the government guarantee, with taxpayers exposed if the airline defaults.

The guarantee covers borrowing for three years, from August 1, 2026, to June 30, 2029.

The support gives Fiji Airways financial breathing room as fuel costs rise. It also puts pressure on the airline to deliver its cost reductions and return to sustainable profitability.