Former Tongan prime minister and ex-chairman of the board of Lulutai Airlines (L8, Tongatapu) says the trouble-plagued carrier should have no problems paying back its TOP6 million pa'anga (USD2.5 million) loan. Hu’akavameiliku Siaosi Sovaleni has told reporters that Lulutai “has sufficient assets to cover its debt."
State-owned Lulutai Airlines, which flies to four airports around Tonga, recently told the Tongan government it needed a TOP7 million (USD2.9 million) capital injection to maintain services. Current caretaker prime minister ʻAisake Eke and his public enterprises minister, Piveni Piukala, were unimpressed and threatened to wind up the airline.
Sovaleni, who chaired the Lulutai board alongside his job as the Prime Minister, resigned last December ahead of a no-confidence motion after a run-in with the king, Tupou VI. While in power, Sovaleni was sometimes accused of being too close to Lulutai and allowing a sloppy financial and governance regime at the carrier. Last May, Tupou VI called out the airline's lack of financial and ownership transparency.
Sovaleni now says Lulutai's only debt was a TOP6 million loan made to the airline by the State Retirement Fund, which owns 27.19% of the airline, and that TOP800,000 (USD335,250) of that had been repaid. He said the recent TOP7 million request was not for a handout but a loan that would be repaid. Discounting the TOP6 million loan, the government has pumped TOP15 million (USD6.23 million) into Lulutai since its inception.
Recently, the Eke administration sacked Lulutai CEO and Sovaleni ally Poasi Tei, temporarily replacing him with Tevita Palu, a former director and CEO of now-defunct Real Tonga Airlines (Tongatapu). The government started Lulutai Airlines to fill the service void after Real Tonga went out of business. Palu is tasked with reviewing Lulutai's operations, among other things. Meanwhile, Eke has appointed himself Sovaleni's replacement on the Lulutai Airlines board.
