Papua New Guinea is reviving plans to sell its troubled flag-carrier, Air Niugini. Prime minister and finance minister Sir Mekere Morauta has announced that bids will be invited from overseas airlines during the first quarter of this year.
According to local media reports, a study that was due to be concluded by late December will address issues such as what percentage of the airline to sell, the size of a private placement and domestic public offering, and the sale price.
Port Moresby's privatisation commission has retained three groups of financial consultants to help it on these and related issues.
Local observers expect the government to keep majority control of the airline. Last July it hinted it would sell only up to 30%. Morauta told reporters recently that several foreign airlines were interested.
The government first invited foreign carriers to bid for 50-70% of Air Niugini in 1997. Talks with Qantas Airways in 1998 ended without agreement.
Since then, the flag-carrier has struggled to recover from the 1997 Asian economic crisis and has faced labour unrest, a revolving door of senior managers, and continuing claims of government meddling.
Speaking at a recent seminar on investment in Papua New Guinea, Mike Manning, head of the Institute of National Affairs in Port Moresby, blamed the failure of state-owned enterprises on interference by politically appointed boards, "appalling" management and bad investment decisions. Morauta believes privatisation is the best solution to these problems.
The government's strategy for Air Niugini is to improve performance and to sell a minority stake to a foreign airline, asking it to take over management.
Officials now realise that local leadership has failed, so they have hired Australian Peter Roberts as Air Niugini's first foreign chief executive since 1996. Roberts is no stranger to South Pacific aviation, having headed two island airlines and been an adviser to several others.
Source: Airline Business
