Solomon Airlines shut down over unpaid bills

Transcript

The Solomon Islands ministry of aviation says it is hoping it can come to an agreement with Solomon Airlines after a total shutdown of its operations grounded all international and domestic flights. 

In ordering the indefinite shutdown, the airline's chief executive Ron Sum Sum said millions of dollars in unpaid government arrears had seriously compromised airline operations.

The permanent secretary of the ministry of aviation, Moses Virivolomo, said attempts were being made to reach a resolution with the airlines today with the aim to have services resume tomorrow.

Koroi Hawkins reports

The immediate concerns for state owned Solomon Airlines are millions of dollars in outstanding government payments which are hampering the airline's operations. Its manager of commercial services Gus Kraus says this includes the company not being able to pay for the release of its flagship domestic Dash 8 aircraft still stuck in Australia after a blow out in its scheduled maintenance bill. 

We believe the government owes us somewhere between 15 and 18 million at the moment. If they paid up those arrears we can slowly work towards seeking some respite and buying us time for the government to consider some stakeholder capital to be reinjected into the company.

The permanent secretary of Solomon Islands ministry of aviation, Moses Virivolomo, said attempts were being made to reach a resolution with the airlines.

We are trying to resolve that today as soon as possible and we will let you know the progress but we are hoping that we will have the situation undercontrol by the end of the day and having flights resumed tomorrow.

But the shut down also has deeper roots in longer term financial commitments made by government. Gus Kraus says this includes an agreement made in 2008 in which the government agreed to match dollar for dollar the airline's $US6.7million expansion plans.

So far it has not been considered very strongly and the CEO has come to a stage that as the accountable manager and the AOC holder he has had no option because we are operating under financial duress and in fact we talk about safety that is an aftermath of the fact that if we do not address the financial duress it will become a safety issue.

Of more immediate concern for the aviation ministry however is the perception of Solomon Islands the impasse presents to the world. Mr Virivolomo said he wanted to stress to the regional and international community that the shutdown has nothing to do with the safety of Honiara's international airport.

It is an operational issue this is nothing to do with integrity of international airport in Honiara. Nothing to do with the security nothing to do with the airport management or air traffic or the facilities at the airport it is basically operational issues with the airline itself.

But Gus Kraus says as the owner of the airline the government needs to deliver on its promise to inject capital into the struggling airline. In our minds we have improved Solomon Islands 10 fold since 2008.

If the company has delivered services to the people of Solomon Islands and benefits then give credit where it is due and let the government make the decision on whether it wants a national airline or it doesn't. At the end of the day it is for the people of Solomon Islands.

As a result of its financial difficulties Solomon Airlines also earlier this year suspended its Honiara to Sydney service - a development route that it had also sought unsuccessfully to have government subsidise.