Former Tongan Prime Minister Siaosi Sovaleni asserts that Lulutai Airlines possesses enough assets to meet its financial obligations. This statement comes amid government scrutiny of the airline’s fiscal health.
Responding to current Prime Minister Aisake ‘Eke’s remarks about Lulutai’s financial instability, Sovaleni, who resigned last December before a no-confidence motion, addressed the media yesterday. He emphasized that the domestic airline can overcome its current challenges.
As the former chairman of Lulutai’s board, Sovaelni highlighted that the airline has repaid TO$800,000 of its TO$6 million loan (at 6% interest) from the Retirement Fund Board, which holds about 30% stake in the company. The government owns the remaining shares. He added that TO$5.7 million in principal and interest remains outstanding.
Sovaleni expressed confidence that Lulutai’s financial report indicates it has enough assets to cover its debt. “The debt to equity ratio is 0.5,” he said.
The government recently dismissed Lulutai CEO Poasi Tei, appointing Tevita Palu, director of Palu Aviation and Real Tonga, as interim chief executive. This move aims to facilitate a review of the airline’s operations.
Addressing claims that Lulutai sought a TO$7 million government grant, Sovaleni clarified that the airline is requesting a loan, not a grant, which it intends to repay. He added that a management proposal to invest more funds in the airline is expected to raise $6 million in profits.
Established in 2020, Lulutai Airlines has faced financial and operational challenges, prompting the current government’s review to determine its viability and future direction.
