AIR FIJI INSOLVENT, TERMINATES BUSINESS

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200 employees will be out of work

SUVA, Fiji (Fiji Sun, May, 1 2009) – Financial troubles have forced the Air Fiji board to pass a resolution terminating all the business of the company from today. This was done to avoid the risk of violating laws by carrying on business from an insolvent position, a letter from the directors to the shareholders says. And that means the airline’s 200 employees will be without work.

The board of Air Fiji has passed a resolution yesterday terminating all the business of the company as of today.

The resolution was passed to avoid the risk of a violation of laws for carrying on business from an insolvent company. And the airline's 200 workers will be now without work.

A copy of the board resolution was provided to all shareholders for consideration in an effort to salvage the company out from its current situations. In a letter written to all shareholders of Air Fiji Limited by chairman of the board of directors Wu Shengyue, the shareholders were told of the financial trouble the company had been going through since 2004.

The letter summed up a meeting on the March 5, 2009 where management presented to the board an urgent report revealing the true financial status and operational results of the company. And upon reviewing the management report, the board was convinced the company had become insolvent.

The letter stated the company began to suffer persistent cash flow crisis as early as in 2004, which problem has never been resolved.

As the major shareholder, Aviation Investment Limited (AIL) (formed by China Aviation Technology Import-Export Corporation (CATIC) and Tuvalu Government) has been sparing no efforts in saving Air Fiji from collapsing.

Mr. Shengyue said in the letter that the shareholders were also told that CATIC had directly provided several loans with an accumulated amount of US $3,530,000 to the company since 2006. In addition, the company rented three Y12 aircrafts from CATIC in 2006 but had not paid CATIC a single penny from the beginning till today. Meanwhile, the Tuvalu Government provided guaranty on the overdraft credit facility granted by National Bank of Tuvalu to Air Fiji.

In the meantime, CATIC has been providing regular spares support and engineering expert for more than 11 years.

CATIC had even continuously provided three aircraft engines for leasing to the company or offsetting its external indebtedness.

To finance the operation, AlL has done its best and utmost. Unfortunately, AIL now cannot offer any further financial support to the company. Shengyue said the directors of the board also contributed their energy and wits trying to find the resolution for Air Fiji's survival and development.

Also enclosed in the five page documents are the current fierce competition and operational difficulties Air Fiji is facing and the urgent report from CEO Sialeni Vuetaki and financial manager. "To avoid the risk of a violation of laws for carrying on business for an insolvent company, the board passed a resolution on April24, 2009 on terminating all the business of the Company from April 30, 2009.

The board welcomes any efforts or suggests any shareholder may make in an effort of saving the Company from the current situations," adds Mr. Shengy.

Transport workers union Kamlesh Kumar said he called the Air Fiji management after receiving the letter but was told that they are not aware of the resolution.

He confirmed that nearly 200 workers in the airline would be affected.

Meanwhile, Tuvalu High Commissioner Tine Leuleu yesterday represented the Tuvalu government at a meeting with a CATIC representative in Suva yesterday.

They both refused to comment on the issue when approached yesterday.

A worker at the Tuvalu High Commision's office revealed that Mr. Leuleu met with Air Fiji chief executive officer Sialeni Vuetaki on Wednesday. AIL currently holds 86 percent of Air Fiji shares while the Fiji government is also a minor share holder of the company.

FijiSUN: http://www.sun.com.fj/

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