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NASFUND recently updated its logo for a fresh new look and presumably a fresh new direction to continue building value to its members. Those plans doesn’t include PNG Air at all. In actual fact, their Board subject to regulatory approval has agreed to dispose off its shares entirely.
The Superannuation company owns 39.29% shares in PNG Air and is the largest shareholder. In terms of its investment in monetary terms, nasfund has equity investments totaling K31million plus a K45million loan to PNG Air as part of a rescue package granted between 2016 and 2017.
In a media release issued by nasfund, the company said that its Board had agreed to sell its 39.29% stake to Link PNG outlining two key reasons for its decision:
- it had not received a single dividend payment from PNG Air since its initial investment 12 years ago
- PNG Air’s share price dropped from its initial float of K1 per share to a rather disappointing 12 toea per share before PNG Air’s suspension from trading on the PNG Stock Exchange (formerly Port Moresby Stock Exchange)
nasfund says its decision is purely commercial decision and was quite blunt in its assessment of PNG Air stating the airline as “non performing, illiquid and non-yielding investment for nasfund”.
As to whether the purchase by Link PNG may result in unfair competition and job losses, nasfund says these issues have been covered in the Link PNG proposal. While that is indeed good news for both consumers and PNG Air staff, the decision on price and jobs will ultimately be in the hands of PNG Air and not the outgoing shareholder.
nasfund CEO, Ian Tarutia, said:
“We view the proposed deal as a win-win for all parties involved. Firstly, nasfund protects the investment value of its members. Secondly, no PNG Air citizen staff will lose their jobs. Finally, it is in the country’s interest to have one strong airline efficient and cost-effective services for our people rather then two under performing carriers. PNG Air has a better chance of survival if it partners with Link PNG under a more efficient operational model”.
If the CEO’s last reasoning is any indication, PNG Air, at the way it is going, won’t survive unless it teams up with Link PNG.
nasfund considers that the deal will bring forth much needed stability in the domestic airline industry, it will protect jobs and ensure the continuance of reliable, safe and affordable air services in the country.
At this stage, the proposal remains a proposal and the final decision is ultimately in the hands of the Independent Consumer and Competition Commission to determine whether the purchase of nasfund shares by PNG Air is, amongst other things, likely to lessen competition in the domestic airline market.