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Solomon Airlines new chairman very confident of national carrier's future

Posted on April 27, 2021 at 05:00 PM in General News

Full Transcript

I am honoured and pleased to have this my first opportunity as Chairman of the Board of Directors of Solomon Airlines to meet and present to our media on the affairs of Solomon Airlines and its challenges and opportunities.

The COVID-19 virus has placed the global community, our country, and our airline in unprecedented times and unchartered skies. There is no clear indication that the pandemic will subside soon.

I can not emphasise more the important role our national airlines play in supporting our economic and social development. Connecting Solomon Islands to the rest of the world, providing essential services, transporting essential cargo, and servicing our remote islands. I would like to see one day a quantum of the multiplying effect of this essential service.

We do acknowledge the service comes at a cost and we are making efforts to improve on our cost efficiency and give value for money to our customers.

Back here at home, our Government, as the single major shareholder of Solomon Airlines Limited, has come forward to support with a grant of $5 million (SBD) under the Stimulus Package, and a concessional loan of 53 million dollars (SBD). The loan is for the purchase of our new Twin Otter and also additional relief funds to support the airline's cash flow.

As Chairman I wish to convey the appreciation of the Board, Management and staff of the airlines, for this important and significant support by our shareholder. This is also an indication of the commitment by our Government to have our national carrier continue its service for the greater benefit of our country.

Our flight path remains clear. To see through this turbulent period of COVID-19 restrictions and be in a position to do better when the skies are clear and travel restrictions are lifted in our region.

As Chairman, I feel it is important to inform the people of Solomon Islands the following significant background information.

Between 2012 and 2016, Solomon Airlines Limited has been making and accumulating losses. However, the airline posted a profit in 2017 and 2018. 

2020 saw a big hit on the airline's finances, firstly through the impairment of our A320 jet engine which resulted in losses when we arranged the sales. And then, of course, the significant downturn in passenger numbers both internationally and domestically.

The airline has built up for 2020 to be a good year, not knowing COVID-19 was around the corner, there was already an order in place to get a new Twin Otter, and the finances were strong, ready to propel the airline into another good year. However, as I said, the unfortunate event with the A320 impairment and the downfall in passenger numbers has caused a big drop in our cash flow and also in our book numbers.

The airline Board and Management are working hard to improve the company's finances, to ensure our operating costs and creditors are paid, and their services retained. But I am confident, and I hope the country, the shareholder, can see that faring with other airlines in the Pacific region, Solomon Airlines has done very very well. 

We are still flying a restricted international route, our domestic services continue. Our challenge now is to raise revenue and maximise revenue so we can see ourselves through this very very difficult time.

Over the past years up until 2019, the international route has been more profitable than the domestic route. Passenger numbers domestically are greater, but the international route is more profitable and we hope that once these dark clouds are over, that we should return to some semblance of normalcy with better international passenger numbers.

We are revisiting the domestic fare structure, to see how we can make the fare work better for the airlines, there are some routes that are profitable and most are loss-making routes. And this is also an area that we hope that the nation and the shareholders will appreciate, that we are subsidising many routes in this country, even some routes that have airports with runways that create a lot of expenses for our airline because they are poorly maintained and create a high maintenance and repair cost for our planes.

So with that backdrop, we'd like to see that there is appreciation from Solomon Islanders and we know that the Government recognises it and hence, continuing to support us through this difficult time.

As Chairman, I am strongly confident of a sustainable future given strong Government support, and given strong management reviews of our current situation, and coming up with the strategies that will maximise our revenue and make us a more nimble organisation by way of cost-efficiency. We have a major consultancy report that the Government has commissioned that has just been presented, and we will be using the findings of that report to fine-tune our strategy going forward and also our operations.

Going forward also we'd like to see a more robust strategic and corporate plan, capacity development for Solomon Islanders in all aspects of operations, restructuring where necessary, and also to maximise potential partnerships with other airlines in the region. I look forward to further constructive interaction with the media and stakeholders, and we welcome constructive ideas. 

This is our airline and we'd like to make it work, and I'm sure the CEO and the Management team would like to see that we have good involvement, strong involvement by our shareholder and the people of this country, to make our airline continue to fly through these difficult times and soar higher when the skies are clearer.


Supporting Media Statement

Solomon Airlines newly appointed Chairman Mr. Frank Wickham said today he was very confident of a sustainable future for the national carrier, despite financial challenges created by the COVID-19 pandemic and closure of international borders.

“Solomon Airlines has shown resilience and succeeded against the odds,” Mr. Wickham said.

Speaking at his first media conference since his appointment as Chairman in February, Mr. Wickham, who is also a Director of Investment Corporation of Solomon Islands (ICSI), acknowledged the airline’s team, the difficulties faced during COVID-19, and discussed the airline’s future.

“It is a credit to Solomon Airlines management and team that the company achieved a successful turnaround between 2017 to 2019, and has now endured global aviation’s most difficult year,” he said.

“While thousands of airlines around the world have gone out of business due to no revenue and grounded aircraft, Solomon Airlines has shown fortitude,” he added.

“Prior to COVID-19, they had successfully pursued a strategy which returned the airline to profitability, improved efficiency, and were building a stronger national carrier for the future. 

“By 2019, traffic on the newly opened Brisbane-Munda international route was growing, total inbound tourism to the Solomon Islands had grown by 3% and was on track to grow by at least 6% in 2020.

“The airline had taken delivery of a new international aircraft, finished the refurbishment of the old Twin Otters, completed the search for a replacement Twin Otter with greater cargo and passenger load capability.

“In a major IT advancement, Solomon Airlines reservations system was successfully extracted from Qantas and a more modern version put in place, which has now been extended to most of our airports on the islands.

“The Solomon Islands Tourism Infrastructure Development Fund (SITIDF) was established to help resorts to upgrade their rooms by providing interest-free loans. This initiative was driven by Solomon Airlines with funding largely provided by the New Zealand Government. 

“Since COVID-19, the funding not used for development has been given to operators over the past year to help them keep going while international borders are closed and domestic tourism is developed.

“By the end of 2019, Solomon Airlines was ideally positioned for growth in 2020 but like all airlines, did not expect the consequent collapse of the aviation and travel industry due to COVID-19.

“Even in light of the challenges and losses being sustained, the airline has maintained regular scheduled domestic flights to all ports throughout the Solomon Islands and has made the majority of its revenue by actively seeking international charter work.  

“While borders remain closed and scheduled international flights are suspended, Solomon Airlines has operated numerous Government approved charter flights to Australia, New Zealand, Australia, China, Philippines, Fiji, Vanuatu, and Tonga.

“Our national carrier is resilient and looking forward I am very confident of our sustainable future.  We are turning a page, with the distribution of the world’s first COVID-19 vaccinations now occurring and the commencement of travel bubbles within the South Pacific region.

“Solomon Airlines has survived through careful management of costs, the goodwill of creditors, strong Government support in the form of a concessional loan and stimulus grant, domestic tourism initiatives, and securing charter work for the A320 aircraft.

“While it is still probably a year before we can return to normal operations and profitability, our focus now is on shoring up continuing financial viability until borders open and the volume of international traffic can again be developed.

“International charters will continue to generate as much income as possible and we will seek to work with our regional airline partners to maximise assistance to each other. 

“Like airlines everywhere, we are also reliant on ongoing government support, and until borders open we are preparing our fleet, our team, and our plans to ramp up our services as soon as we are allowed to do so.”

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