An Asian Development Bank (ADB) report has highlighted the risks associated with the Samoa Government’s decision to operate an airline.
The report, Finding Balance 2023: Benchmarking Performance and Building Climate Resilience in Pacific State-Owned Enterprises, pointed out the millions of tala losses that Samoa Airways made since commencing operations in November 2017.
“Cumulative losses have wiped out shareholders’ funds which, by 30 June 2020, were SAT$17.9 million,” stated the report.
“In its final year of operation, Polynesian Airline’s annual losses equated to 20 percent of the government’s budget.”
The report said that in 2005, the Samoa Government signed a joint venture with Virgin Australia to establish Polynesian Blue.
“While Polynesian Blue’s accounts are not publicly available, it paid the government a SAT$5.7 million dividend in 2016.”
“From 2005 to 2017, Polynesian Airlines only flew domestic and American Samoa services but was profitable, earning an average 6 percent return on assets over that period.”
The data that the ADB report quoted were obtained from the Polynesian Airlines audited financial accounts, as well as Pacific Private Sector Development Initiative.
The report said, the Samoa Government’s Polynesian Airlines experience shows the risks associated with airline ownership, in particular when facing international competition.
