Legal action threat over $70,000 debt

Samoa Air, the company that took the world by storm with the announcement of grand plans for flights to and from Samoa, owes “nearly $70,000” to Polynesian Airlines.

As a result, Polynesian Airlines has asked the Attorney General’s Office to take legal action against its rival.

The debt is revealed in a report by Parliament’s Finance and Expenditure Committee (F.E.C.) obtained by the Samoa Observer.

The F.E.C.’s report on Polynesian Airline's Annual Reports for the Financial Years of 2012 and 2013 was among 39 reports tabled and approved by Parliament without debate, last month.

Chaired by Papali’i Niko Lee Hang, other members of the Committee include Vice Chairperson, Tafua Maluelue Tafua and members Palusalue Fa’apo II, Tialavea Tionisio Seigafolava, Taefu Lemi, Afualo Dr. Wood Salele and Lealailepule Rimoni Aiafi.

“The Company affirms that Samoa Air has already sold some of its aircrafts to the Government of Tonga,” the report reads. “The General Manager stated that the Company is trying its best to follow up with the outstanding debts of Samoa Air, which adds up to nearly $70,000.

According to the report, “Samoa Air is willing to pay only $2,000 of that given amount.”

This has apparently angered Polynesian Airlines.

“The Company has already informed the Attorney General‘s Office to take legal action and provide a letter of advice to Samoa Air for the payment of their outstanding debts,” the report reads.

Further, the Committee’s report has also revealed the Samoa Airport Authority’s (S.A.A.) plans to close Fagali’i Airport.

The Authority feels that Fagali’i is “not far from the Faleolo International Airport.”

“The Committee noted that this move by the S.A.A. was based on the fact that there was no need to provide the services and human resource for Fagali’i airport, when they are available at the Faleolo International Airport.

“The Polynesian Airlines showed their disappointment over this opinion of the S.A.A. The Company still believes that the Fagali’i Airport should still be in operation as it has always been.” In the report, the F.E.C. also noted the progressive work of Polynesian Airlinbes, especially on the financial side of things.

“The Committee noticed, following the evidence submitted by the General Manager, the continuous improvement in the services of the Company as well as the steady growth in the profits secured not only within the seven months of the Annual Report of 2012 but also for the Annual Report of 2012/2013,” the report reads.

“The primary evidence of the Company’s success as stated by its Management, is reflected in the two Annual Reports.

“In the Financial Year of 2012/2013, the total profit accumulated by the Company was close to $1.4 million.

“By January of 2014, the total profit accumulated was recorded at approximately 13 per cent compared to the five per cent that was noted last year.

“Moreover, the Management stated that the Company has up to about $11 million of savings with the Banks, compared to $9 million from June of 2013.

“Polynesian Airlines stated that, despite the steady growth in the financial affairs of the Company as reflected in the two Annual Reports, the Airline is still looking at ways to enhance the appropriation and utilization of the Company’s finances over the maintenance of Company assets.”

The Committee’s report is published here in full: The Finance and Expenditure Committee Report on the Annual Report of the Polynesian Airlines for the Financial Yeas Ended 30th June 2013 and Financial Year Ended 30th June 2013.

1. RECOMMENDATION: The Finance and Expenditure Committee recommends that the Assembly takes note of its Report.

2. PREAMBLE The Finance & Expenditure is constituted pursuant to provision of Standing Orders 170.

3. STANDING ORDER 170: In accordance with the provisions of Standing Orders 170, it shall be the duty of the Committee to:- (a) Consider any bill, petition or other matter referred by the Assembly pursuant to Standing Orders; and any Estimates or review of ministerial and departmental performance; (b) Allocate to any Select Committee the examination of any Estimates and of any review of departmental performance; (c) Examine the policy, administration and expenditure of insurance, superannuation, national provident fund, taxation, auditing of public accounts and Ministerial financial statements; (d) Have responsibility for the overall review of financial management in all government ministries and public bodies; (e) Examine and report on the public account.

4. PAPER CONSIDERED:

1. P.P 2012/2013 No.61, Annual Report of the Polynesian Airlines for the Financial Year Ended 30th June 2012

2. P.P 2013/2014 No.75, Annual Report of the Polynesian Airlines for the Financial Year Ended 30th June 2013

5. ASSISTANCE (S.O.156):

The Committee in the course of its investigation of the Polynesian Airlines Financial Statements heard evidence submitted by: Polynesian Airlines:

Taua L. Fatu Tielu - General Manager Daisy H. Roebeck - Manager Corporate Services

6. FINDINGS:

The Annual Report of the Polynesian Airlines outlines the work completed and achieved by the Airline for the Financial Year ended 30"‘ June 2012, and the Financial Year ended 30th June 2013. The committee thanked the Company and its Management for complying and submitting of their Annual Reports to the Assembly in accordance with government policies.

Polynesian Airlines operates scheduled services between Fagali’i Airport and Pagopago International Airport (American Samoa) as well as services to and from international destinations and Faleolo International Airport.

6.1 Financial status of the Company The Committee noticed following the evidence submitted by the General Manager, the continuous improvement in the services of the Company as well as the steady growth in the profits secured not only within the 7 months of the Annual Report of 2012 but also for the Annual Report of 2012/2013. The primary evidence of the Company’s success as stated by its Management, is reflected in the two Annual Reports.

In the Financial Year of 2012/2013, the total profit accumulated by the Company was close to $1.4 million.

By January of 2014, the total profit accumulated was recorded at approximately 13% compared to the 5% that was noted last year. Moreover, the Management stated that the Company has up to about $11 million of savings with the Banks, compared to $9 million from June of 2013.

Polynesian Airlines stated that, despite the steady growth in the financial affairs of the Company as reflected in the two Annual Reports, the Airline is still looking at ways to enhance the appropriation and utilization of Company’s finances over the maintenance of Company assets.

The Committee noted the progressive work of the Company, especially on the financial side of things.

One of the main objectives of the Company that was considered was trying to minimize the amount of expenses while pushing forward for ways to increase profits.

The Committee noted the continuous services of the Polynesian Airline for the two Bodies from the Annual Report of 2011/102 as well as the Annual Report of 2012/2013. These two Bodies include the Polynesian Company Limited and the Polynesian Airlines Investment.

6.2 POLYNESIAN COMPANY LIMITED

Polynesian Limited’s main lines of activities include the provision of passenger and cargo air carriage services within the South Pacific, and mainly between Samoa and American Samoa.

It has been evident in the Annual Reports of 2012 and 2013, the steady growth in the profits secured by the Company. Some of these profits were accumulated from the reopening of the Fagali’i airport which saw the resumed services that included international flights to Tutuila and Manu’a (American Samoa). The Committee noted that the Polynesian Company Limited has always been the main operator of the Fagali’i airport since its reopening.

However, the Company’s General Manager and its’ Management revealed their disappointment over some differences they encountered with the Samoa Airport Authority (SAA), regarding the operation of the Fagali’i airport as there was a plan by the Government to transfer the operation of the airport under the Samoa Airport Authority (SAA).

Moreover, the Airline also affirmed to the Committee that the Samoa Airport Authority are having plans to close down the Fagali’i airport as it is not far from the Faleolo International Airport.

The Committee noted that this move by the Samoa Airport Authority (SAA) was based on the fact that there was no need to provide the services and human resource for Fagali’i airport, when they are available at the Faleolo International Airport.

The Polynesian Airline showed their disappointment over this opinion of the Samoa Airport Authority (SAA). The Company still believes that the Fagali’i airport should still be in operation as it has always been. The Committee also noted that the managing of ground handling operations at the Faleolo International Airport is now under the operations of the Samoa Airport Authority (SAA). This was one of the services which helped boost the income for the Company when it used to be under its operations.

The General Manger for Polynesian Airline revealed that the differences between the Company and the Samoa Airport Authority (SAA) could have been avoided, had there been compliance of decisions made with government policies and guidelines. The Committee feels that the two parties should work together to identify and work out ways to settle these differences.

6.3 POLYNESIAN AIRLINES INVESTMENTS

The Polynesian Airlines (Investments) Limited is a private company which was established under the Companies Act 2001. The main objective for establishing this Company was targeting the investments of the Company.

The Committee took note of the period in which airline services were provided between Samoa and American Samoa. In the Financial Year of 2012/2013, it was reported that there were two Airlines which provided services between the two countries which include Inter- Island and Samoa Air.

The Polynesian Management informed the Committee that the airline services of Samoa Air at Fagali’i airport has now been ended.

As of today, the Polynesian Company does not have knowledge of Samoa Air’s future plans, but the Company affirms that Samoa Air has already sold some of its aircrafts to the Government of Tonga.

The General Manager stated that the Company is trying its best to follow up with the outstanding debts of Samoa Air which adds up to nearly $70,000. Samoa Air is willing to pay only $2,000 of that given amount. The Company has already informed the Attorney General‘s Office to take legal action and provide a letter of advice to Samoa Air for the payment of their outstanding debts.

7. RECOMMENDATIONS At the conclusion of its consideration the Committee resolved to recommend to Government: l. That the Corporation in partnership with the Samoa Airport Authority (SAA) work hand in hand to identify and work out ways to improve its services not only to the public, but also to cater for international airlines that use the Faleolo International Airport. 2. To review and identify benefits in the privatization of the Company in managing and implementing of its own services in order to accumulate profits. The Committee recommends this review on the basis that income of the Corporation continues to increase under the current Management, as reflected in the annual reports of the Company for the two Financial Years. 3. To review whether operation of the Fagali’i Airport should continue or use the Faleolo International Airport for all airway travels. 4. That the Corporation follows up the outstanding debts of Samoa Air in order to increase the income of the Company.

8. RESOLUTION: At the end of its inquiries, the Committee resolved to recommend to the Assembly to approve, 1. P.P. 2012/2013 No.61, Annual Report of the Polynesian Airlines for the Financial Year Ended 30th June 2012 2.

P.P 2013/2014 No.75, Annual Report of the Polynesian Airlines for the Financial Year Ended 30th June 2013

Hon PAPALIITELE Niko Lee Hang

CHAIRPERSON