Air Pacific 2009 Annual Report by Keep The Faith

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Commitment to the environment

Air Pacific is near finalisation of the development of an Environment Management System (EMS) to be integrated with the Company Safety & Security Management System. The EMS is a tool to manage the impacts of Air Pacific’s operational activities on the environment, basically aircraft engine emission, aircraft noise, in-flight services waste and ground waste. All staff will undergo environment awareness training. Air Pacific has taken appropriate steps to address environmental issues as follows: • To reduce paper use, the Company has established an electronic manual system for staff to have access to company manuals through intranet. This eliminates paper use and waste related to hardcopy issuance. • Air Pacific has successfully achieved the target of switching to electronic tickets (ET). • As part of our fuel conservation efforts, a team has been set up to reduce consumption. • Air Pacific will soon offer passengers the opportunity to offset the carbon emissions related to each flight they take with us. This will be done at the point of purchase where the customers will be presented with the option of offsetting their flight. As a concerned corporate citizen, these initiatives are in addition to Air Pacific’s existing commitment to environmental awareness and responsibility where environmental issues are concerned. As a major business in Fiji, we support the development of tourism in the country. We also support the maintenance of a clean and natural environment to enhance our tourism product. Employees of Air Pacific are encouraged to participate in various ‘clean-up’ campaigns that take place in the community. Air Pacific’s overall commitment is to the maintenance and promotion of a clean and pure environment. We practise recycling wherever possible, for its economic and environmental benefits and reduce waste material and engine emission. We actively seek and use biodegradable and non-polluting chemicals in aircraft maintenance and cleaning tasks.

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Contents Chairmans Report Reeport Chairmanâ&#x20AC;&#x2122;s Report ... Members of the Board ...

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Managing Director & Chief Executive Officerâ&#x20AC;&#x2122;s Report ...

Corporate Governance ...

The Year in Review ...

Route Map ...

Financial Statements & Reports ...

Five Year Comparative Statistics ...

Air Pacific Offices ...

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Chairman’s Report Nalin Patel

“I extend my appreciation to

The Air Pacific Group (incorporating Air Pacific Ltd, Fiji Airlines trading as Pacific Sun and Richmond Limited, joint owners of Sofitel Fiji Resort and Spa), recorded a disappointing $14.3 million loss before tax for the year ended 31st March 2009 versus a pre tax profit of $38.15 million the preceding year, a negative swing of $52.45 million. The Group after tax loss was $7.17 million versus a post tax profit of $24.96 million the preceding year. Air Pacific, as a company, incurred a loss before income tax of $12.2 million compared with a pre tax profit of $41.1 million for the previous financial year. This represents a swing of $53.3 million. While Group revenue increased by 16% to $648.5 million, expenditure increased substantially, and at $655.1 million was $119.8 million (or 22%) higher than the prior year’s $535.3 million. As a Company, Air Pacific’s revenue increased by $80 million or 15% versus last year to $622.8 million but, expenditure at $628 million, rose 21% or $110 million. AIR PACIFIC LIMITED: (Loss)/Profit Before Tax Financial Year Ending 31 March 2009 50 40 FJD Millions

the ‘team’ at Air Pacific and thank them all for persevering during what was without doubt one of the toughest years the airline has experienced in its 58 years of operation.

”

Shareholders’ Equity for the Group fell from $161.8 million to $111.1 million, as $50.7 million was re-injected into cash flow in order for the Company to service hedge commitments and meet costs. The Directors determined that no dividend be paid to shareholders. Despite rigid expenditure controls throughout the year, operating costs soared. The key drivers were fuel, aircraft lease and hire, major heavy maintenance checks on all six jet aircraft and royalty withholding tax. Cost escalation was also driven by a strengthening US dollar, given that Air Pacific’s major expenditures are incurred in US dollars whilst earnings were in weaker currencies. The cost impact of foreign exchange losses was $10 million. Jet fuel prices were particularly volatile, peaking at US$187.50 per barrel in July 2008. With jet fuel forecast to reach US$200 a barrel by the end of 2008, a decision was taken in June and July 2008 to hedge approximately 33% of the airline’s 2008/09 jet fuel requirements at around US$155 a barrel.

20 10 0 (10) (20) 2005

2006

2007

2008

2009

The subsequent dramatic drop in spot fuel prices from August 2008 to US$120 was unforeseen and totally unexpected, catching airlines around the world off guard. Fuel prices continued to drop and, in January 2009, reached their lowest point of just over US$50 a barrel.

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From left to right: Paul Edwards, Isikeli Waqa, Simon Hickey, Aslam Khan, Nalin Patel – Chairman, John Campbell – Managing Director & CEO, Bernadette Rounds-Ganilua, Charles Harvey. Absent: Narendra Kumar

Board of Directors

AIR PACIFIC LIMITED: Expenditure Composition

The hedging strategies introduced during the year resulted in an ‘out of money’ position, with a hedge loss impact of $62 million.

Financial Year Ending 31 March 2009 Fuel

Major expenditure and cash drawdowns were incurred due to heavy maintenance ‘D’ Checks on Air Pacific’s two B747-400 aircraft. Total cost of these checks was $22 million. Hiring of replacement aircraft to minimise schedule disruption during the four months the B747-400 aircraft were being serviced incurred a further cost of $19 million. Compounding this scheduled expenditure was the worsening of the global economic crisis in the second half of the year. The negative impact on business travel and tourism inflows greatly affected traffic volume and yield, resulting in depressed earnings. Natural disasters also played their part in adding to Fiji’s tourism woes. Apart from the devastation Nadi’s January 2009 floods caused to Fiji residents, many resorts were badly damaged and infrastructure hard hit, causing AIR PACIFIC LIMITED: Shareholders’ Equity Financial Year Ending 31 March 2009 180 160 140 120 100 80 60 40

Others

2007

2008

Engineering and Maintenance

9% Airport

Pax and Crew

Selling and Marketing

disruption and cancellations on a scale not previously experienced in Fiji. Given these circumstances, the dedication, effort and commitment shown by Air Pacific’s management and staff throughout the year is to be applauded. Looking to the future, Air Pacific is not immune from the impact of global economic downturn and further uncertainty is created through the proposed capacity increases by competitors. The journey back to acceptable levels of profitability will be immensely challenging.

0 2006

2009

Lease and Hire

9% 6%

20 2005

10%

On behalf of the Board, I extend my appreciation to the ‘team’ at Air Pacific and thank them all for persevering during what was without doubt one of the toughest years the airline has experienced in its 58 years of operation. I also thank my fellow Directors for their commitment and contribution and the Prime Minister and members of his Government for their support and guidance to Air Pacific throughout the year.

200

FJD Millions

47%

Nalin Patel CHAIRMAN

Manpower

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Managing ChairmansDirector Report Rep port & CEO John Campbell

In last year’s report it was predicted that the year ahead would present difficult operating conditions for the Air Pacific Group and Air Pacific and, for that matter, airlines worldwide. But no one predicted the economic downturn that was experienced worldwide and its impact on tourism and aviation. Few airlines around the world are making profits and all indications are that the operating environment is likely to remain turbulent, an assumption borne out by IATA’s forecast that global airline losses will total US$11 billion in the 2009 calendar year. These losses are underpinned by weakened demand and significant surplus capacity globally. It was against this backdrop that Air Pacific incurred an operating loss of $12.2 million before tax. Although the Chairman has already outlined the key items contributing to this loss it is prudent to further dissect the impact that issues such as fuel, the global recession, aircraft maintenance and natural disasters had on Air Pacific’s operations over the financial year. While the global financial collapse, which started in October 2008 and was in full flight by the end of the financial year, impacted severely on companies worldwide, airlines such as Air Pacific were particularly hard hit. Air Pacific and the Group are highly dependant on tourism inflows to Fiji, coupled with MICE (Meetings, Incentives, Conference, Exhibition) groups and limited but valued business class travellers across the network. AIR PACIFIC LIMITED: Productivity

plunging shareholder returns and staff retrenchments. Fuel cost continued its upwards spiral during the early part of the financial year, rapidly accelerating from US$65 to US$187.50 per barrel. This added in excess of $126 million to our budgeted spend with experts predicting the price would soar past the US$200 per barrel mark. Air Pacific hedged against this fuel increase at up to US$155 per barrel but not even the most astute trader foresaw the spectacular collapse in fuel prices that occurred during the second half of the year. As a result, fuel hedge losses exacerbated the impact of reduced customer numbers on our aircraft.

“The Air Pacific Group carried more than one million passengers, a total of 1,115,790 versus 901,724 in 2007/08.” Then, in January 2009, Fiji almost disappeared underwater as Nadi and the Coral Coast experienced some of the worst flooding seen in decades. During that period Air Pacific cancelled only one flight (to Christchurch) as Operations staff struggled to get Pilots and Cabin Crew to work. The efforts of all staff to come to work and sustain operations were, and are, deeply appreciated. Without that effort thousands of tourists would have been stranded at Nadi Airport without meals or accommodation and relief supplies would not have been flown into Fiji. Media coverage of this natural disaster in all key markets led to massive cancellations and new bookings virtually ceased. New bookings did not eventuate until late March.

Financial Year Ending 31 March 2009 1200 RTK’s per Employee

ATK’s per Employee

FJD Millions

1000 800

The freight market also collapsed, with crops rotting in Fiji fields and manufacturing on a global scale wound down. This created excess freight space and rates in this revenuegenerating area continued to tumble.

600 400 200 0 2005

2006

2007

2008

2009

Negative reporting by overseas media of the political situation in Fiji led to further cancellations as a number of countries issued warnings on travel to Fiji. Media reporting and major metropolitan government’s criticism of the abrogation of the Constitution, in mid-March, further impacted Fiji as a holiday destination.

Apart from the dramatic downturn in holiday traffic as people tightened their purse strings and stayed at home, Business Class traffic, customers that help balance yield, virtually dried up.

With all these factors driving down business at a time operating costs were rising, Air Pacific dramatically cut air fares in order to attract visitors back to Fiji.

A number of companies with conferences and events planned for Fiji cancelled or postponed. Incentive, conference and exhibition bookings disappeared as corporations sent out messages of austerity to demonstrate savings and cost avoidance against a background of

As a consequence, all forms of expenditure were further tightened and severe restrictions were placed on staff recruitment and replacement and capital purchases. Operationally, we flew our aircraft dynamically, reducing planned services to match low demand by withdrawing

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AIR PACIFIC LIMITED: Revenue Composition Financial Year Ending 31 March 2009 Cargo and Mail Capacity Seat Sale

Other

20% 70%

Passenger

some flights to Sydney, Auckland, Brisbane, Melbourne and Los Angeles. Aircraft were swapped to match the size of aircraft flown to demand on specific routes to minimise fuel burn and operational costs. Loss making routes of Japan and Honolulu-Vancouver were cancelled, Gold Coast flights were commenced and suspended and services to Funafuti initiated. Flights between Nadi, Christmas Island and Honolulu were suspended pending runway repairs on Christmas Island. Despite cost minimisation, the 2008/09 year was one in which all jet aircraft in our fleet faced scheduled heavy maintenance checks. Both B747-400 aircraft underwent D-Checks in Singapore, which necessitated each being off line for two months at a time. In addition to the cost of these checks, Air Pacific incurred an additional $19 million expenditure to charter replacement aircraft to maintain support for Fiji’s tourism industry and to honour schedules. One of the brighter lights of the year was the improved performance of Air Pacific’s subsidiary, Pacific Sun, which continued to make a valuable contribution to the seamless carriage of Air Pacific’s international passengers on the domestic and regional South Pacific front whilst concurrently improving and expanding domestic flights.

For the first time, the Air Pacific Group carried more than one million passengers, a total of 1,115,790 versus 901,724 in 2007/08. Despite cost controls, we continue to invest in technology and our people. A Cultural survey was conducted, resulting in a number of organisational training and development changes. The reporting line of HR is now direct to the Managing Director and Chief Executive Officer, an Employee Services Group has been established and a new Training Manager appointed, leading to a full review of training needs and courses. An Executive Assessment for succession planning was concluded by a team of outside consultants. Three sixtydegree reviews led to rotation of executives to round out their strengths and prepare them for advancement within the management structure. Despite ongoing cost controls and market stimulation, Air Pacific continues to find trading conditions arduous. The airline remains steadfastly committed to its role as Fiji’s international airline and will continue its efforts to operate profitably in a depressed global economy that is just starting to show signs of slow recovery. The 2009/10 year will be even more difficult than 2008/09 with traffic and yields deeply depressed, Fiji’s tourism and traffic still to recover, additional competitors entering the market and ongoing fuel hedge losses. I would like to take this opportunity to thank the Board, Chairman and Government for their guidance and support, and management and staff for their extraordinary dedication and commitment to the Company, especially during the natural disaster in January this year. Such commitment bodes well for the future of Air Pacific and reflects on the resilience that is an intrinsic part of the make up of the people of Fiji. John Campbell MANAGING DIRECTOR & CEO

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Corporate Governance BOARD RESPONSIBILITIES • Protect and enhance shareholder value • Set and review corporate strategies and strategic direction • Monitor operating and financial performance • Set and review senior executive succession planning • Risk management • Report to shareholders BOARD STRUCTURE • Minimum of five and maximum of nine Directors • Four Non-Executive Fiji Directors are appointed by the Fiji Government • One Executive Fiji Director (Chief Executive) is appointed by the Fiji Government • Four Non-Executive Directors are appointed by Qantas providing Qantas holds more than forty percent of all voting shares • Chairman is a Non-Executive Director To ensure the independence of the Air Pacific Board and to protect the airline’s position as the Fiji flag carrier, the Articles of Association (Articles) provide that: • The location of the Head Office and Principal Operational Centre will be in Fiji; • Fiji Directors (who must be Fiji Nationals) will comprise the majority of Directors; • The Chairman and Deputy Chairman must be a Fiji Citizen; • Whilst Qantas has the right to appoint Qantas Directors and holds more than ten percent of voting shares in the Company, it cannot vote in any election or removal of Fiji Directors by shareholders; • Each Non-Executive Fiji Director is appointed for a term of three years; • Quorum for a Directors’ meeting is five Directors and must include one Qantas Director while Qantas holds more than ten percent of voting shares; • Approval by two-thirds of Directors for specific major decisions (as shown in the Articles) by the Board.

BOARD MEETINGS • Minimum of six meetings a year COMMITTEES • Board does not delegate major decisions to Committees. • Committees are responsible for considering detailed issues and making recommendations to the Board. • Audit Committee - four meetings a year - assists the Board in fulfilling its accounting and financial reporting responsibilities, corporate policies and procedures - reviews and monitors internal and external auditors - consists of four Directors, of which one must be a Qantas Director • Remuneration Committee - one meeting a year - recommend to the Board remuneration package for the Managing Director & Chief Executive Officer - consists of three Directors, of which one is a Qantas Director • Safety & Security Committee - four meetings a year - assists the Board in fulfilling its corporate governance responsibilities in regard to safety and operational security, operational risk management, and compliance with operational, legal and regulatory obligations - consists of three Directors, of which one must be a Qantas Director STANDARDS • Formal review of Board performance • Active participation by all Directors at all meetings • Open access to information • Independent professional advice is available to all Directors • Formal Code of Conduct – covering conflict of interest CODE OF CONDUCT The Air Pacific Code of Conduct governs Air Pacific commercial operations and the conduct of the Directors, employees, consultants and all other people when they represent Air Pacific. GENERAL PRINCIPLES All Directors and employees of Air Pacific are to undertake their duties with honesty and integrity, and in a manner consistent with the highest ethical standards prevailing in the business communities. Air Pacific employees must act in the best interest of Air Pacific.

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The Year in Report Review Chairmans Re eport NETWORK PERFORMANCE Throughout the 2008/09 financial year, Air Pacific invested in destination marketing in collaboration with Tourism Fiji to ensure strong presence in core markets. With a strong marketing presence, revenue increased by 15% against a 9% increase in capacity versus 2007/08 whilst passengers carried by Air Pacific increased 5.1% from 848,712 to 901,724. Poor revenue performance for the last quarter of 2008/09 dragged down the overall year’s results. This was due primarily to the impact of the January floods on Fiji’s tourism, the growing affect of the global financial crisis, and was further impacted by negative publicity in Australia and New Zealand following political developments in Fiji.

Pacific Sun’s increased presence has added a new dimension to Air Pacific’s marketing with the domestic subsidiary offering seamless connections to customers throughout Fiji’s domestic and regional routes. AIR PACIFIC LIMITED: Passenger Revenue Financial Year Ending 31 March 2009 Christmas Island/ Honolulu Honolulu/ Vancouver

4% Los Angeles

Strategies included preserving strong ties with trade partners, growing the e-Commerce platform including greater focus on Air Pacific Holidays, our on-line dynamic packaging solution, pushing network traffic and enhancing the Air Pacific product through renovation of the Nadi Tabua Lounge and refurbishment of cabin interiors during scheduled aircraft heavy maintenance checks.

31%

32% 10% Japan

Each market presented its own challenges and required a range of tactical rather than brand advertising initiatives to achieve volume and retain destination market share. The strategy to drive volume came at the expense of yield.

Pacific Islands

13% New Zealand

Australia The Australian region started the year off positively with good volume and strong yields underpinned by the strengthening of the Australian dollar. The final quarter of 2008/09 saw a collapse in demand and revenue as a result of negative PR following the January 2009 floods. Overall capacity was up 3% with total passenger revenue up 15% on 2007/08. Flight frequency for all ports was reduced as aircraft capacity was matched with demand in the final quarter.

Australia

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From left to right: Watson Seeto – GM Freight & Operational Services, Thomas Robinson – GM Engineering, Dallas Foon – GM Strategic Planning, Ashwin Singh – GM Finance, Capt. Matereti Tuisue – GM Flight Operations & Chief Pilot, Josephine Yee Joy – EGM Corporate Support & Company Secretary.

Destination competition remained strong throughout the year with traditional markets of Indonesia, Thailand, Vietnam, Hawaii, New Zealand and other South Pacific islands posing serious competition for Fiji and Air Pacific. A push by the Australian government and Tourism Australia for Australians to holiday at home as a result of diminishing inbound tourism, coupled with low pricing by domestic carriers, created a new competitive threat for Fiji. Increased frequency by a competitor redirecting excess capacity from Australian domestic markets to Fiji added further pressure for Air Pacific. Competition for market share in a declining market saw Air Pacific go head-to-head on pricing contributing to greatly reduced yields in the latter six months of the year. To supplement point-to-point traffic, network selling was actively pursued with North America destined travellers attracted via competitive pricing and schedule alignment. This traffic base is limited for Air Pacific given aggressive trans-Pacific competition between Qantas, Delta, United and Vaustralia. AIR PACIFIC LIMITED: Operating Revenue

“…negotiations took place with Alaska Airlines and a code share agreement was reached to carry Canadian traffic via Los Angeles, providing continued presence in the Canadian market.” A negative groundswell towards Fiji caused by the country’s political problems impacted adversely on outbound travel from New Zealand, with other Pacific Island destinations benefiting as a result. Strong destination competition and value based pricing required Air Pacific and Tourism Fiji to run consecutive tactical campaigns to remain visible in an extremely cluttered retail environment. The Cook Islands, Samoa, Tahiti,Vanuatu and New Caledonia now pose serious competition and Fiji will need to work hard to regain its preferred status as the premier destination within the South Pacific. This is achievable given the range of branded product in Fiji and dedicated airlift offered by Air Pacific. Marketing campaigns will be able to restore good volume with a stable political backdrop.

Financial Year Ending 31 March 2009

North America The North American market continued its steady performance from the previous year, finishing 22% up on last year’s revenue despite the significant softening of US origin traffic in the final quarter as the economic collapse impacted leisure and business travel.

700 600 FJD Millions

500 400 300 200 100 0 2005

2006

2007

2008

2009

New Zealand Overall, New Zealand routes performed strongly in 2008/09 despite deterioration in the final quarter of the financial year. This was due in part to the strong contribution from the UK/Europe and North American markets on the AKL-NAN and CHC-NAN routes cushioning the soft performance of New Zealand origin traffic. Overall revenue was down 1% with capacity down 1% on last year.

Capacity grew 28% for the year out of Los Angeles but was down 33% to Honolulu due to cessation of HonoluluVancouver flights. Following the withdrawal of the Honolulu-Vancouver service, negotiations took place with Alaska Airlines and a code share agreement was reached to carry Canadian traffic via Los Angeles, providing continued presence in the Canadian market. The U.S. market performed similarly to Australia with the first six months posting strong results and the second half struggling under the weight of the global financial crisis which had a flow-on effect on yields because of deterioration in business class travel.

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John Campbell – Managing Director & CEO, Glen Brabant – EGM Operations/Services, Jimmy Samson – GM Customer Relations & Service, Michael Nacola – GM Sales & Marketing, Ranjan Naidu – GM Information Technology & Communication, Isake Komailevuka – GM People

In the earlier months, Air Pacific operated five and six B747 services per week into the U.S, but frequency was pared back to four services in the second half of the fiscal year. Most activity in the market was tactically driven and Air Pacific worked closely with specialist wholesalers selling the South Pacific. Increased e-commerce activity in a market that is very internet-driven helped to build the profile of Fiji and the airline. As in other markets, the booking profile shortened significantly with up to 50% of bookings coming in during the eight-week period prior to travel with vacationers scouring the net for the best deals. Japan A lot of attention and effort was focused on the Japan route in an effort to turn around what has been a declining market for several years. Air Pacific worked closely with Japan-based wholesalers, Japan Inbound Tour Operators Commission and Tourism Fiji on tactical campaigns aimed at building traffic.

downturn towards the end of the year that mirrored the airline’s overall performance. Revenue was up around 32% on last year with a 21% increase in capacity. Twice-weekly ATR42 services to Tuvalu were introduced in August 2008, operated by Pacific Sun on behalf of Air Pacific. Services to Samoa were increased from two to three per week during peak season as were services to Tonga (two per week ex-Nadi and up to three per week out of Suva). Vanuatu was also serviced by two B737 flights per week with one of those services continuing on to Honiara. Twice weekly B737 services are operated to Tarawa in Kiribati however quasi charters to Christmas Island remain suspended until the airstrip has been upgraded. FINANCE

Unfortunately, a combination of escalating operating costs with declining yields and volume forced a decision to withdraw services from Tokyo effective end March 2009. This was a particularly hard decision as Air Pacific had been operating to Japan for the past twenty years and Narita was Air Pacific’s only gateway to Asia.

Cash management was a major issue for Air Pacific over the year. As a direct result of the worsening global financial crisis, booking trends shortened from three months and longer to six to eight weeks from date of travel, resulting in tightening cash flow from September 2008.

Fiji and Pacific Islands The Pacific Islands performed to expectations throughout the year. Most routes carried steady traffic apart from a

Compounding the cash flow impact of the late booking trend, yields continued to decline as prices were cut to stimulate demand. Cash flow was further hampered by losses associated with fuel hedging. Following record fuel cost increases Air Pacific hedged on a rising market against forecasts that jet fuel would reach USD200 per barrel. However, the dramatic and unexpected plunge in fuel prices from August 2008 left Air Pacific committed to the higher hedged price. Contracts to buy out hedges were not achieved as the Reserve Bank of Fiji did not approve applications for remittance of funds from Fiji to pay for the purchase of floor pricing.

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Offshore borrowing was obtained due to Reserve Bank of Fiji’s requirement to bolster and protect Fiji’s cash reserves. Air Pacific’s cash had to remain onshore and was not permitted to remit funds for offshore commitments. Staffing of senior roles in Finance was again a major issue with five key positions lost to overseas migration. Constant on the job training is carried out in an effort to promote from within but some of the positions had to be filled by advertising externally. Last year saw the adoption of new IFRS standards for the Company’s financial reporting. This year’s financial report provides more disclosure and detail on key financial drivers, risks and impact of market trends and shifts. Finance continues to provide full accounting functions for subsidiaries Richmond Limited and Pacific Sun. Staff are on secondment to Pacific Sun and ongoing training is being conducted for the domestic and regional carrier. Finance’s Revenue Accounting Systems were reviewed and updated during the year to maximise efficiency.

“A Three-Year Plan was developed and presented to the Board based on growing business through the introduction of new regional services and adding new international ports to the network.” STRATEGIC PLANNING Further delays to the delivery dates of the new Boeing 787 aircraft due to production problems incurred by Boeing forced Air Pacific to extend lease and maintenance arrangements on the B767-300 and two B747-400 aircraft. The two B747 aircraft underwent scheduled heavy maintenance D-Checks during the year which presented

an opportunity to refresh and refurbish the interior of the aircraft to maintain standards during the lease extensions. As each aircraft was offline for two months at a time, relief aircraft were obtained to maintain schedules for the benefit of Fiji tourism. Despite a scarcity of suitable aircraft for short-term lease, negotiations were successfully concluded to lease a fully crewed aircraft through United Airlines. A Three Year Plan was developed and presented to the Board based on growing business through the introduction of new regional services and adding new international ports to the network. Following route studies the decision was taken to operate to fly to Coolangatta on Queensland’s Gold Coast and to Hong Kong. Coolangatta commenced twice weekly B737 operations in early December 2008, immediately following cessation of the Honolulu-Vancouver service. The route initially performed to expectation but the Fiji floods in January 2009 and the escalation of the global financial crisis led to declining travel markets worldwide. The service was suspended and flights consolidated with daily BrisbaneNadi services in March 2009. The Hong Kong service was deferred from June to December 2009 in view of the global economic conditions. An ongoing Strategic Planning role is the maintenance of Air Pacific’s government relationships in Fiji and throughout the region. Several presentations were made to various government ministers and officials and assistance was provided to the Fiji government in the negotiations for Hong Kong traffic rights and the air service agreement with the Chinese government. A Memorandum of Understanding was signed and an Air Services Agreement finalised for initiation in April 2009.

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INFORMATION TECHNOLOGY A number of projects identified in the 3-year IT Strategic Plan approved by the Board last year were initiated during the year. One of the most significant events was the implementation of Air Pacific’s Disaster Recovery Centre in July 2008. VT Solutions were contracted to establish this mirror operations centre offsite in Nadi. To protect business continuity Air Pacific now has a backup site that guarantees ‘business as usual’ in the case of a disaster at Head Office. All critical systems currently in use within the airline have a real-time redundant switch over. Air Pacific’s electronic ticketing project, initiated to meet IATA’s paperless ticketing deadline, achieved 100% implementation across the network. The IT and Airport departments were heavily involved with the training and implementation of new Customer Management and Flight Management systems for all ports in the domestic and international network. Through the

commitment and dedication of the project team all airports were able to cut over by March 2009, thereby replacing the old Qantas QUBE system. Employing the latest in internet technology, Air Pacific successfully implemented the AMADEUS ALTEA check-in and flight management systems. Air Pacific is now in the process of implementing one of IATA’s Standardising the Business projects – bar coded boarding passes. These new boarding passes will replace the old magnetic strip system. All airports should be online with bar coding by December 2009. A de-centralised Refunds System was established in all regional stations in December 2008. This allows each office to speed up the processing of customer refund claims that previously had to be handled as a paper-intensive process originating from head office. Enhancement of the Air Pacific website continued throughout the year to introduce more online product options through the Air Pacific Holidays booking engine. These enhancements achieved $1 million a week performance by July 2008. Sales continue to rise in 2009. Fiji is also now fully compliant with U.S. Homeland Security AQQ online requirements that safeguard travel to and from the United States. Certification was obtained in March 2009. Work is currently underway in Hong Kong to interlink with the two major reservations systems in the Asia region – ABACUS and SKYTRAVEL. Once both systems are online, 95% of sales and distribution for Air Pacific will be interlined. Automation upgrades were completed for all Air Pacific ports including remote stations Christmas Island, Funafuti and Tarawa.

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Self-ticketing and the establishment of B2B portals on the internet are other streamlining options currently being developed as Air Pacific focuses on online distribution and promotion in line with customer preference for self service. A wireless communication network was implemented between the Air Pacific headquarters, the Nadi and Suva airport offices and its subsidiary regional airline, Pacific Sun. A new PABX/telephony system that ‘talks’ wirelessly to the Air Pacific network was also implemented for Pacific Sun. HUMAN RESOURCES One of the major tasks undertaken by the Human Resources division was an internal ‘Cultural’ survey that involved interviews and input from staff network wide to evaluate staff satisfaction, training needs, career planning and motivation. A number of initiatives related to delivery of expectations of staff and management arose from this survey. These included: - Individual HR relationship accountability for specific departments within each division - Improved departmental manager training to oversee and direct outcomes - Creation of an Employee Services department to not only better administer staff issues but to also involve staff more in the delivery process and support their welfare and wellbeing - Increased emphasis on the ‘Relations’ side of ‘Industrial Relations’ both internally and with external organisations such as Unions - Development of specific HR-based skills such as succession planning and career development. The division is now reviewing how staff are recruited, trained and progressed through the ranks to ensure Air Pacific has the people skills and resources to meet projected

expansion and increasingly sophisticated IT and service applications. The cultural survey also identified areas requiring action to turn negative feedback into positive outcomes. Improvement Teams, headed by GM People, have been established in selected divisions with the aim of generating involvement from the less senior ranks. There is a need to involve everyone in sharing information, contributing suggestions and playing a role so that management is not isolated in the decision-making process. The crux of the program is to improve communication and provide adequate training so that personnel are better equipped to improve productivity, customer services and streamline operations. The IPHRIS system was upgraded to reflect and handle these initiatives with new modules being inserted into the system to help chart and customise career paths for individuals. Performance Management systems were also reviewed to link with productivity-related initiatives. FALPA, Air Pacific’s pilots association, also signed off on a ‘more you work, the more you are paid’ productivityrelated agreement. Dialogue is continuing with other unions in order to broker similar initiatives. The division also supported employees who were in need of urgent overseas medical attention. Employees and management pulled together to create an appeal that raised $100,000 that went towards treatment for two Air Pacific staff members. The closure of the Japan office after more than twenty years involved redundancy packages for station staff compliant with Japanese labour laws. Although difficult for all, the redundancy program was successfully concluded without the need for legal or union intervention.

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The January floods in Nadi generated a huge groundswell of support from all staff, management and the tourism industry in general with many kind and generous gestures that involved the provision of food, shelter and aid to flood victims – many of whom were Air Pacific employees. FREIGHT Price played a very significant part in Air Pacific’s freight strategy during the year. The overall market shrank and was very much price-driven, making generation of a reasonable yield to meet revenue budget a very difficult proposition. The continued high price of fuel, low yields and reduction in air-cargo volumes influenced the cargo business results.

“Following the January 2009 floods in Fiji, Air Pacific coordinated and donated the cargo space for more than 60 tonnes of relief material being flown into Fiji.” Following the January 2009 floods in Fiji, Air Pacific coordinated and donated the cargo space for more than 60 tonnes of relief material being flown into Fiji. Clothing, footwear, food, tents, water bottles, medical equipment and school supplies arrived from Australia, New Zealand, Japan and North America. These were distributed to charitable organisations and Air Pacific staff affected by the flooding. LOGISTICS At the beginning of the financial year, Air Pacific actively sought new contract pilots to meet the forecast demand for increased schedules and to cover operations whilst National pilots underwent progression courses and training, particularly from B737 to B767 and B747 aircraft and from

wide bodied Second Officer to B737 First Officer roles. At one point, the Company’s pilot register listed fifty-three expatriate pilots on short-term contracts. As the global economic situation worsened and flights were cut back and aircraft types re-scheduled to match demand, the number of contracted pilots was reduced to a point where less than thirty remained. The Company is still concentrating on fast-tracking local pilots and retaining their services by offering structured succession planning and involving pilots in the progression process. OPERATIONS A vast effort went into the IATA Operational Safety Accreditation (IOSA) Audit. Working closely with inspectors and auditors Air Pacific’s team carried out amendments to manuals and processes met stringent guidelines on safety and security in order to qualify for this important accreditation. All requirements were met by the September 2008 deadline. Procedures for pilots and engineering have also been fine tuned under the LOSA (Line Operations Safety Audit) Program where data on flight operations is collected electronically by downloading computer records of flights which do not involve training, checking or any other requirements that might cause aircrew to modify their flight command behaviour. Data collected covers take off and landing, fuel burn during flight and a host of other safety and performance related issues. This was all part of a concerted effort to focus on safety, quality and security management within the airline. Air Pacific employs some of the most advanced and sophisticated safety and security management systems available and to be used effectively they have the total commitment of all staff involved.

page 16 - air pacific annual report 2009

ENGINEERING & MAINTENANCE It was a busy year for Engineering with five major aircraft and engine checks and overhauls and two unscheduled engine changes. Air Pacific’s two leased B747 aircraft underwent planned D-Checks in Singapore with each aircraft offline for two months (Oct-Nov 2008/Feb-Mar 2009). In addition, all six CFM56-7B engines on the B737 fleet underwent scheduled overhauls and Pacific Sun’s two ATR42, for which Air Pacific handles maintenance and spares control, went to Tahiti for their scheduled C-Checks. In December 2008 a B737-700 engine experienced abnormal oil consumption in Nadi. With assistance from a Delta engineer who flew in from the USA on a freighter with the replacement engine, the changeover was effected within a 48 hour turnaround in Nadi. Thanks to the round-

the-clock efforts of the Engineering team, the aircraft was able to fly out on its scheduled Sunday service to Christchurch. Despite these scheduled and unscheduled maintenance issues and the ongoing problem of bird strikes at Nadi Airport (an issue that is still being addressed in consultation with AFL), the airline achieved Technical Dispatch reliability of 98.25% across the Air Pacific fleet and 98.85% for Pacific Sun’s ATR fleet. Training remains a high priority in Engineering with the continuous migration of skilled tradesmen. The vacant Manager Aircraft Maintenance position provided an opportunity to develop four local engineers by rotating them through the position to provide valuable managerial experience. CUSTOMER RELATIONS & SERVICE Customer Service continues to be the central focus for the division, which underwent re-structuring at the end of the financial year when responsibility for Airports was added to the Customer Relations, Cabin Crew and Catering portfolio. Buoyed by the positive results of the IOSA Audit, CR&S conducted a series of training workshops and courses involving cabin crew aimed at service elements such as grooming, food/wine knowledge, inflight service refinements, addressing passengers and knowledge of inflight supplies. Two external trainers were brought in to conduct these courses. The division now meets monthly with ATS Catering Centre to review operations and to plan the two-monthly meal cycle change. In an effort to optimise service delivery, bi-monthly ‘snap audits’ are conducted inflight with customer and cabin crew feedback used to institute changes and improvements.

page 17

Project Sabeto This ambitious corporate undertaking involves all divisions in a review of the airline’s brand, service style and delivery and airports customer services designed to lift the airline’s presentation to meet customer expectations identified through research. Airport presentation and efficiency was one of the first areas to be addressed with Nausori Airport office and the Tabua Club lounge in Nadi Airport both undergoing major facelifts. Improved customer service handling at Nadi is being addressed in consultation with ATS personnel. PACIFIC SUN Air Pacific’s domestic and regional subsidiary continues to expand rapidly. With the benefit of two years’ operational experience behind it, Pacific Sun is growing steadily in confidence and performance, with the addition of extra services on popular domestic routes plus the opening of new ports in Fiji and throughout the region. Starting with a staff complement of 130 in February 2007, the airline now has over 170 employees, sixty of whom are pilots with twenty of those employed on the popular ATR42. This growth is reflected in the number of passengers carried – increasing from just 4,000 per month on startup to an average of around 18,000 in 2008/09. The airline now operates up to eight ATR42 Suva-Nadi services a day, with a second hub being established out of Suva to service Savusavu, Taveuni and Kadavu. In March 2009, new services began operating between Suva and Levuka and from Nadi and Suva to Taunovo Bay once daily.

“Pacific Sun is ever-mindful of its commitment to provide a safe, comfortable and on-time flying experience for passengers throughout its expanding domestic and regional network.” Charters were also operated to the new 7-star resort on the island of Laucala and to Taunovo Bay Airport in Deuba to service the Royal Davui and Taunovo Bay resorts. When Savusavu Airport closed in July 2008, Pacific Sun introduced direct daily Nadi-Labasa ATR42 flights. Following the re-opening of Savusavu in December 2008, these direct Labasa flights were retained in addition to twice daily (plus a third service on weekends) Suva – Labasa ATR42 flights. The domestic network will expand further with licences approved to Cicia,Vanuabalavu and Rotuma. As part of future plans, Pacific Sun looks forward to an upgraded Rotuma Airport capable of accepting ATR aircraft and serviced by Government as a Customs Entry point for traffic from Tuvalu. Underpinning this growing frequency and establishment of new ports is the seamless integration and connections offered to arriving Air Pacific international passengers. Holiday makers can now book international point to domestic point connecting flights through links to Air Pacific’s online booking engine. The introduction of e-ticketing in Fiji has generated increased support with all domestic ports now linked. The next phase will see local hotels and resorts being able to access the booking engine to make reservations for guests.

page 18 - air pacific annual report 2009

The airline was also involved in destination-based tactical advertising campaigns for Fiji during the year, further reinforcing the seamless booking benefits to holiday makers. On the regional side, the creation of a regional South Pacific network using Pacific Sun to connect with north and southbound international traffic into Nadi, is gathering momentum. In addition to increased services to existing destinations of Tonga and Port Vila, a new twice-weekly ATR service to Funafuti was launched in August 2008. This service has been very well received with an additional weekly flight added in peak periods. During the year, Pacific Sun took over passenger check-in functions at Nadi. Capabilities for limited avionics work in-house are being developed with on-the-job training. Two engineers were sent to Air Pacific for engine monitoring training and another engineer to Pratt & Whitney to gain experience on Cessna engines.

Fuel costs continue to be a challenge, consuming 30% of the airline’s overheads. This makes the maintenance of affordable air fare initiatives like the ‘Red Eye’ and ‘Companion’ fares, aimed at stimulating demand in light traffic periods, that much more difficult. Pacific Sun outsources its IT requirements to Air Pacific who act as a Bureau Centre for the airline. All Pacific Sun domestic airports within Fiji and throughout the region are electronically linked to Pacific Sun head office, which in turn links into the Air Pacific system. While growing its business is a key priority, Pacific Sun is ever-mindful of its commitment to provide a safe, comfortable and on-time flying experience for passengers throughout its expanding domestic and regional network.

page 19

Wings of Hope This community based project that starts with the ‘Cash for Kids’ envelope collection on board all flights is now well established and provides much needed support to children’s charities, schools and organisations in Fiji. The committee undertook five major projects this year including supply of generators and office equipment, building renovation and installation of bores in rural area schools, and the donation of mini buses to The Hilton Special School and the Treasure Home Orphanage. All these projects were carried out by Air Pacific staff volunteering their own time and energy.

AUSTRALIA

HONG KONG

Melbourne NEW ZEALAND

Sydney

Brisbane

VANUATU Port Vila

SOLOMON ISLANDS Honiara

Christchurch

Auckland

Nadi

Tuvalu Funafuti

KIRIBATI Tarawa

SAMOA Apia

Suva

TONGA Nuku’alofa

FIJI ISLANDS

HAWAII Honolulu

1210 2714 8215 5103 3865 967 3169 10618

Auckland Christchurch Honiara Los Angeles Nuku’alofa Suva Tarawa

*Apia–Honolulu service to start 11 September 2009 *Hong Kong–Nadi service to start 03 December 2009

Air Pacific Routes ----------------------------------------------------------Codeshare Routes - - - - - - - - - - - - - - - - - - - - -

Australia Honolulu New Zealand Pacific Islands Los Angeles Vancouver

2157 2897 2093 8886 867 123 2176

Alaska Air New Air Airlines Zealand Qantas Vanuatu ● ● ● ● ● ● ●

Alliance Partners Codeshare Table

Apia Brisbane Hong Kong Honolulu Melbourne Port Vila Sydney Vancouver

Distance from Nadi to Destination (km)

UNITED STATES OF AMERICA Los Angeles

CANADA Vancouver

l ia nc na fi ts en em at st d an s rt po re Directorsâ&#x20AC;&#x2122; Report

Independent Auditorsâ&#x20AC;&#x2122; Report

Income Statements

Statements of Changes in Equity

Balance Sheets

Statements of Cash Flows

Notes to and Forming Part of the Financial Statements

page 22 - air pacific annual report 2009

Air Pacific Group Directors’ Report for the Year Ended 31 March 2009

The Directors of Air Pacific Limited (the Company) present their report together with the financial statements of Air Pacific Group (“the Group”) being the Company and its controlled and jointly controlled entities for the year ended 31 March 2009 as set out on pages 24 to 49 and the auditors’ report thereon in accordance with the Companies Act 1983. Directors The Directors of the Company at the date of this report are: Nalin Patel – Chairman Charles Harvey Aslam Khan Narendra Kumar Isikeli Waqa

John Campbell Paul Edwards Simon Hickey Bernadette Rounds Ganilau

State of Affairs In the opinion of the directors: (i)

the accompanying Income Statements, Statements of Changes in Equity and Statements of Cash Flows are drawn up so as to give a true and fair view of the results and cash flows of the Group and the Company for the year ended 31 March 2009.

(ii)

the accompanying Balance Sheets are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 March 2009.

Principal Activity There has been no material change in the nature of the Group’s or Company’s business or in the classes of business in which the Group or Company has an interest. The Company has a 100% ownership interest in Fiji Airlines Limited. The principal activity of Fiji Airlines Limited is the provision of domestic and regional air transport services. The Company has a 38.75% interest in Richmond Limited. The principal activity of Richmond Limited is the ownership of the Sofitel Fiji Resort & Spa at Denarau Island in Nadi. Operating Results The operating loss of the Group after income tax benefit of $7.133M (2008: expense of $13.186M) for the year ended 31 March 2009 was $7.170M (2008: profit of $24.964M). The operating loss of the Company after income tax benefit of $7.066M (2008: expense of $12.566M) for the year ended 31 March 2009 was $5.178M (2008: profit of $28.527M). Reserves An amount of $43.5M (2008: $Nil) has been charged to Shareholders’ Equity as Hedge Reserve. Dividends The Directors recommend that no dividend be paid (2008: 47.75 cents per share, $12.459M) Events Subsequent to Balance Date On 15 April 2009, the Reserve Bank of Fiji devalued the Fiji Dollar by 20 percent. No adjustment has been made in respect of this in the financial statements for the year ended 31 March 2009. The general effect of the devaluation would include a likely increase in future revenue, an increase in future costs of operations denominated in foreign currencies in Fiji Dollar terms and increases in Balance Sheet items denominated in foreign currencies. Dated at Nadi this 25th day of September, 2009. Signed in accordance with a resolution of the Directors.

Nalin Patel DIRECTOR

John Campbell DIRECTOR

page 23

Air Pacific Group Independent Auditors’ Report to the Members of Air Pacific

Scope We have audited the financial statements of Air Pacific Limited and of the Group (comprising the consolidated financial statements of the Company and its controlled entity) for the year ended 31 March 2009, consisting of the Income Statements, Statements of Changes in Equity, Balance Sheets, Statements of Cash Flows and accompanying notes, set out on pages 24 to 49. The Company’s directors are responsible for the preparation and presentation of the financial statements and the information they contain. We have conducted an independent audit of these financial statements in order to express an opinion on them to the members of the Company. Our audit has been conducted in accordance with Fiji Standards on Auditing to provide reasonable assurance as to whether the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial statements, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial statements are presented fairly in accordance with International Financial Reporting Standards and statutory requirements so as to present a view which is consistent with our understanding of the Company’s and the Group’s financial positions and the results of their operations and their cash flows. The audit opinion expressed in this report has been formed on the above basis. Audit opinion In our opinion: (a)

proper books of account have been kept by the Company, so far as it appears from our examination of those books, and

(b)

the accompanying financial statements of the Company and the Group which have been prepared in accordance with International Financial Reporting Standards: (i)

are in agreement with the books of account;

(ii)

to the best of our information and according to the explanations given to us: (a)

give a true and fair view of the state of affairs of the Company and the Group as at 31 March 2009 and of the results, changes in equity and cash flows of the Company and the Group for the year then ended;

(b)

give the information required by the Companies Act 1983 in the manner so required.

We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.

25th September, 2009 Nadi, Fiji Islands

KPMG Chartered Accountants

page 24 - air pacific annual report 2009

Air Pacific Group Income Statements for the Year Ended 31 March 2009

Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

Note

$’000

Revenue

648,471

558,422

622,787

542,842

Staff & Related Costs Operations Selling & Marketing Fuel Depreciation & Amortisation Impairment Losses Administrative Expenses Share of Net Loss of Jointly Controlled Entity

4 5

65,930 166,565 36,218 305,515 22,887 1,133 56,809 89 655,146

57,855 173,477 37,763 177,191 20,797 453 67,516 218 535,270

59,509 163,022 35,277 297,725 17,739 54,747 628,019

52,807 171,230 37,175 171,339 17,393 2,000 65,569 517,513

10 5 5 12

(Loss)/Profit From Operations Finance Income Finance Expenses Net Finance (Expense)/Income

6 6 6

Operating (Loss)/Profit Before Income Tax Income Tax (Benefit)/Expense

Operating (Loss)/Profit After Income Tax

(6,675)

23,152

(5,232)

25,329

5,148 (12,776) (7,628)

18,303 (3,305) 14,998

5,764 (12,776) (7,012)

19,069 (3,305) 15,764

(14,303)

38,150

(12,244)

41,093

(7,133)

13,186

(7,066)

12,566

(7,170)

24,964

(5,178)

28,527

Basic Earnings Per Share

(0.27)

0.96

(0.20)

1.09

Diluted Earnings Per Share

(0.27)

0.96

(0.20)

1.09

The Income Statements are to be read in conjunction with the Notes to and Forming Part of the Financial Statements set out on pages 28 to 49.

page 25

Air Pacific Group Statements of Changes in Equity For the Year Ended 31 March 2009

Air Pacific Group

$’000

Hedge Reserve $’000

Balance at 1 April 2007 Operating Profit after Income Tax Dividends Declared (47.75 cents per share)

26,093 -

123,182 24,964 (12,459)

149,275 24,964 (12,459)

Balance at 31 March 2008

26,093

135,687

161,780

Balance at 1 April 2008 Changes in fair value of cash flow hedges Tax effect of fuel hedge reserve Operating Loss after Income Tax

26,093 -

(61,272) 17,769 -

135,687 (7,170)

161,780 (61,272) 17,769 (7,170)

Balance at 31 March 2009

26,093

(43,503)

128,517

111,107

Retained Earnings $’000

Total

Air Pacific Limited

Share Capital

Retained Earnings $’000

Total $’000

$’000

Hedge Reserve $’000

Balance at 1 April 2007 Operating Profit after Income Tax Dividends Declared (47.75 cents per share)

26,093 -

129,993 28,527 (12,459)

156,086 28,527 (12,459)

Balance at 31 March 2008

26,093

146,061

172,154

Balance at 1 April 2008 Changes in fair value of cash flow hedges Tax effect of fuel hedge reserve Operating Loss after Income Tax

26,093 -

(61,272) 17,769 -

146,061 (5,178)

172,154 (61,272) 17,769 (5,178)

Balance at 31 March 2009

26,093

(43,503)

140,883

123,473

$’000

The Statements of Changes in Equity are to be read in conjunction with the Notes to and Forming Part of the Financial Statements set out on pages 28 to 49.

page 26 - air pacific annual report 2009

Air Pacific Group Balance Sheets ss at 31 March 2009

Air Pacific Group

Current Assets Cash & Cash Equivalents Term Deposits Income Tax Refund Trade & Other Receivables General Inventories Total Current Assets Non-Current Assets Aircraft, Property, Plant & Equipment Other Deposits Advance to Related Parties Investments Deferred Tax Asset Total Non-Current Assets

2009

2008

2009

2008

Note

$’000

8 8 7(c) 9

15,292 76,316 1,197 117,526 1,105 211,436

31,020 197,988 57,482 597 287,087

14,726 76,316 1,170 112,301 1,005 205,518

29,320 197,988 54,473 554 282,335

171,581 45,450 872 15,893 27,793 261,589

187,511 36,934 819 15,982 7,198 248,444

139,203 45,450 45,760 17,915 28,373 276,701

154,578 36,934 42,631 17,915 7,818 259,876

473,025

535,531

482,219

542,211

23,775 19,776 134,916 35,088 61,272 6,228 1,068 282,123

15,519 151,970 75,258 14,807 4,088 6,037 12,459 280,138

23,775 19,776 131,950 35,088 61,272 6,220 1,068 279,149

15,519 148,590 75,116 14,807 4,079 6,037 12,459 276,607

23,225 38,452 3,032 15,086 79,795

35,641 41,520 4,033 12,419 93,613

23,225 38,452 2,834 15,086 79,597

35,641 41,520 3,870 12,419 93,450

361,918 111,107

373,751 161,780

358,746 123,473

370,057 172,154

26,093 (43,503) 128,517 111,107

26,093 135,687 161,780

26,093 (43,503) 140,883 123,473

26,093 146,061 172,154

11 12 7(b)

Total Assets Current Liabilities Borrowings Lease Liability Trade Creditors & Accrued Expenditure Revenue Recieved in Advance Other Financial Liability Income Tax Payable Employee Benefits Provisions Dividends Payable Total Current Liabilities

13 14

7(c) 15 16

Non-Current Liabilities Lease Liability Deferred Tax Liability Employee Benefits Provisions Total Non-Current Liabilities

14 7(b) 15 16

Total Liabilities Net Assets Shareholders’ Equity Share Capital Hedge Reserve Retained Earnings Total Shareholders’ Equity

17 17

Commitments and Contingent Liabilities

Air Pacific Ltd

19/18

Signed in accordance with a resolution of the Board

Nalin Patel DIRECTOR

John Campbell DIRECTOR

The Balance Sheets are to be read in conjunction with the Notes to and Forming Part of the Financial Statements set out on pages 28 to 49

page 27

Air Pacific Group Statements of Cash Flows for the Year Ended 31 March 2009

Air Pacific Group

Note

Air Pacific Ltd

2009

2008

2009

2008

$’000

Cash Flows from Operating Activities Receipts in the Course of Operations Payments in the Course of Operations Interest Received Income Taxes Paid Interest Paid 6 Net Cash (Used In)/Provided by Operating Activities

612,414 (724,140) 5,491 (14,765) (2,795) (123,795)

581,658 (501,464) 17,188 (6,377) (3,305) 87,700

588,523 (701,889) 5,491 (14,765) (2,795) (125,435)

567,620 (484,872) 17,188 (6,377) (3,305) 90,254

Cash Flows from Investing Activities Advance to Fiji Airlines Limited (subsidiary) Repayment of Advance - Fiji Airlines Limited (subsidiary) Transfer of Funds to Term Deposits Proceeds from Term Deposits Payments for Property, Plant & Equipment 10 Proceeds from Disposal of Property, Plant & Equipment Net Cash Provided By/(Used In) Investing Activities

(76,316) 197,988 (8,316) 238 113,594

(197,988) 156,109 (10,038) 60 (51,857)

(6,676) 3,600 (76,316) 197,988 (2,398) 170 116,368

(10,281) 2,700 (197,988) 156,109 (6,533) 55 (55,938)

Cash Flows from Financing Activities Proceeds from Borrowings Repayments of Lease Dividend Paid Net Cash (Used In) Financing Activities

23,775 (16,843) (12,459) (5,527)

(15,234) (3,914) (19,148)

23,775 (16,843) (12,459) (5,527)

(15,204) (3,914) (19,118)

Net (Decrease)/Increase in Cash and Cash Equivalent Held

(15,728)

16,695

(14,594)

15,198

31,020

14,325

29,320

14,122

15,292

31,020

14,726

29,320

Cash & Cash Equivalents at the Beginning of the Financial Year Cash & Cash Equivalents at the End of the Financial Year

The Statements of Cash Flows are to be read in conjunction with the Notes to and Forming Part of the Financial Statements set out on pages 28 to 49.

page 28 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 1.

REPORTING ENTITY Air Pacific Limited (the ‘Company’) is a public company domiciled in the Fiji Islands. The consolidated Financial Statements for the period ended 31 March 2009 comprises the Company and its controlled entity. In addition, the Company’s interest in its jointly controlled entity is brought to account in the consolidated financial statements using equity accounting (these entities are together are referred to as the Group). The principal business of the Company is to provide air transport services. The principal activity of controlled entity, Fiji Airlines Limited, is the provision of domestic and regional air transport services. The operations of the jointly controlled entity, Richmond Limited, are in the hotel industry and are set out in Note 12. The principal assets are located at Nadi, Fiji Islands. The financial statements were approved by the Board of Directors on 25th September, 2009.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (a)

Basis of Preparation The financial statements have been prepared on a historical cost basis except where stated. The accounting policies have been consistently applied by the Group and the Company, unless otherwise stated. The financial statements are presented in Fiji Dollars and all values are rounded to the nearest thousand dollars ($’000) unless otherwise stated.

(b)

Statement of Compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted by International Accounting Standards Board and the requirements of the Laws of Fiji.

(c)

Use of Estimates and Judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future period affected. In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements are described in the following notes: • Note 2 (h) • Note 2 (i) • Note 2 (k) • Note 2 (m) • Note 2 (o) • Note 2 (p) • Note 2 (s)

(d)

- Depreciation - Aircraft/Engine Overhaul - Trade Receivables - Employee Benefits - Impairment - Trade Creditors & Accrued Expenditure - Income Tax

Principles of Consolidation The consolidated Financial Statements comprise the financial statements of the Company, its controlled entity (Fiji Airlines Limited) and its interest in the jointly controlled entity (Richmond Limited). Controlled Entity The controlled entity (Fiji Airlines Limited), in which the Company holds a 100% interest, is consolidated. The consolidation process eliminates intercompany balances, transactions, income and expenses. Jointly Controlled Entity The jointly controlled entity is an entity over which the Company exercises significant influence or is jointly controlled. In the consolidated financial statements, the investment in the jointly controlled entity is accounted for using equity accounting principles and the Company’s share of the jointly controlled entity’s net profit or loss is recognised in the consolidated Income Statement.

page 29

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 (e)

Foreign Currency Transactions Foreign currency transactions are translated to Fiji dollars at the rates of exchange published by the International Air Transport Association (IATA) at transaction date. In respect of aircraft, property, plant and equipment and revenue received in advance the values calculated at transaction date are not adjusted at balance date to reflect exchange rates then applying. Foreign currency borrowings and lease liabilities are translated to Fiji dollars at the bank exchange rates ruling at balance date. Other foreign currency assets and liabilities are adjusted by applying the IATA rate ruling at balance date. Exchange differences are brought to account in the Income Statement as exchange gains or losses in the financial year in which the exchange rates change.

(f)

Earnings per Share The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is calculated in the same manner as there are no ordinary shares that are considered diluted.

(g)

Aircraft, Property, Plant & Equipment Items of aircraft, property, plant and equipment are recorded at cost and depreciated or amortised on a straight line basis at rates estimated to write off the cost less residual value over the useful life of each class of asset.

(h)

Depreciation Depreciation is charged to the Income Statement on a straight line basis at rates estimated to write off the cost less residual value over the useful life of each class of asset. The estimated useful lives of aircraft, property, plant and equipment for depreciation purposes are: Aircraft and Spares: - B737-700/800 Aircraft & Spares: - B737-700/800 Engines: - B737-700/800 Maintenance & Overhaul: - B767 Spares: - ATR42-500: - Twin Otters and Islanders:

15 years. Residual value being 25% of cost. 11 years. Residual value being 25% of cost. Period to next scheduled maintenance 15 years. Residual value being 20% of cost. 10 years. Residual value being 10% of cost. Based on actual flying hours.

Other: - Plant and Equipment: - Motor Vehicles: - Buildings - Concrete: - Wooden:

3 to 10 years 4 years 80 years 40 years

Buildings are depreciated at the above rates or over the period of the relevant land lease whichever is the shorter. (i)

Aircraft/Engine Overhaul For aircraft under operating lease where there is a contractual obligation to undertake overhauls, provisions are made for the future expected cost of major airframe and engine overhauls equal to the expected cost per flight hour of such overhauls in respect of flight hours since acquisition or the previous overhaul. For aircraft owned or under finance lease, costs incurred in respect of heavy maintenance and overhaul of aircraft engines and airframes are capitalised and depreciated over the period to the next scheduled maintenance. Other non-heavy maintenance and overhaul costs are charged to the Income Statement on consumption or as incurred.

page 30 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 (j)

Leased Assets Finance Leases Assets acquired under finance lease are included as non-current assets in the balance sheet. Leased assets are recognised at the present value of the minimum lease payments and amortised on a straight-line basis to the estimated residual value over the expected useful life of the asset. A corresponding liability is also established and each lease payment is allocated between the liability and finance charges. Operating Leases Operating lease rentals are included in the determination of the operating profit or loss for the year in accordance with the contractual lease payment obligations.

(k)

Trade Receivables Trade receivables are recorded at cost less impairment losses.

(l)

General Inventories General inventories are valued at the lower of cost (calculated using a weighted average formula or first in first out principle) and net realisable value and includes expenditure incurred in acquiring the inventories and bringing them to their existing condition and location.

(m)

Employee Benefits Contributions are paid to the Fiji National Provident Fund or equivalent schemes overseas on behalf of employees to secure retirement benefits. Costs are included in the Income Statement. Outstanding annual leave and long service liabilities due to employees at balance date are brought to account based on current legal and contractual obligations. Provision is made for the future expected retirement and long service leave benefits based on current contractual obligations by applying an actuarial calculation.

(n)

Cash & Cash Equivalents Cash & cash equivalents comprise cash at bank and on hand for the purposes of the Statement of Cash Flows.

(o)

Impairment The carrying amounts of the Group’s and Company’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds its recoverable amount. Impairment losses are recognised in the Income Statement.

(p)

Trade Creditors & Accrued Expenditure Trade creditors & accrued expenditure are stated at their cost.

(q)

Revenue Passenger and freight sales are recorded as ‘revenue received in advance’ and transferred to revenue earned when the service is performed. Passenger and freight sales are included in the Income Statement net of sales discounts. Agents’ commission is included as sales and marketing expense and is recognised on the same basis as revenue. Where services sold are not availed within the following periods, the sales values are transferred to revenue: - ‘BULA’ fare tickets subject to conditions 6 months - other passenger services 18 months - cargo services 12 months In the current year, the Company has changed the revenue recognition for the “other passenger services” category from 24 months to 18 months.

(r)

Finance Income & Expenses Finance income & expenses comprise interest income on funds invested, interest on borrowings and foreign exchange gains & losses.

(s)

Income Tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in the Income Statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

page 31

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 Current tax is the expected tax payable on the taxable income for the year, using tax rates at the reporting date. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. (t)

Derivative Financial Instruments Derivative Financial Instruments are used to hedge fuel prices. These are recognised at fair value both initially and on an ongoing basis. Transaction costs attributable with the hedges are recognised in the income statement when incurred. Air Pacific Group designates fuel hedges as a hedge of highly probable forecast transactions (cash flow hedges). Gains and losses qualifying for hedge accounting are recognised in the same Income Statement category as the underlying hedge instrument. Cash Flow Hedges The effective portion of the changes in fair value of the hedges that qualify for cash flow hedges are recognised in equity in the hedge reserve. Amounts accumulated in the hedge reserve are recognised in the Income Statement in the periods when the hedged item will affect profit and loss.

(u)

Comparatives Certain comparatives figures have been reclassified to conform with current year presentation.

REVENUE Air Pacific Group

Passenger Capacity Seat Sale Cargo & Mail Others Charters (Loss)/Gain on Disposal of Assets Sundry Income Related Parties - Fiji Airlines Limited (controlled entity) - Richmond Limited (jointly controlled entity) Other Parties

Air Pacific Ltd

2009

2008

2009

2008

$’000

460,695 126,299 41,458

384,145 111,329 38,914

436,810 126,299 41,141

368,730 111,329 38,638

2,426 136

6,052 15

2,729 12

6,221 (8)

1,311

1,309

30 17,248 648,471

35 17,786 558,422

30 14,634 622,787

35 16,734 542,842

In 2009, an amount of $2.8M is included in Passenger Revenue for the Group and the Company due to a change in accounting estimate for the timing of recognition as revenue for unavailed passenger services and other charges.

page 32 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 4.

STAFF & RELATED COSTS Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

Included in Staff & Related Costs are the following items: Key Management Compensation - Short Term Benefits - Other Long Term Benefits

3,281 527

3,389 546

2,555 455

2,748 494

Employee Benefits Superannuation Contributions

3,726 3,511

2,665 3,345

3,548 3,276

2,592 3,154

56,477 56,981 53,107 166,565

49,887 57,734 65,856 173,477

3,949 56,081 55,785 47,207 163,022

3,225 49,586 57,001 61,418 171,230

The average staff strength for the Group was 966 (2008: 959) and for the Company was 803 (2008: 804). 5.

EXPENSES Operations Operating Lease Rentals and related costs Related Parties - Fiji Airlines Limited (controlled entity) Other Parties Airport Related Costs Engineering and Maintenance Administrative Expenses Included in the Administrative Expenses are the following items: Directors’ Fees Auditors - Remuneration - Other Services Bad Debts Written Off Allowance for Uncollectability Operating Lease Rentals Exchange (Gains)/Losses

161 58 74 52 30 1,484 (5,715)

157 51 43 675 227 1,480 5,863

161 38 69 52 30 1,422 (5,801)

157 38 41 669 227 1,422 5,863

Impairment Losses

Impairment Loss – Aircraft (Note 10) Impairment Loss – Goodwill

1,133 1,133

453 453

2,000 2,000

page 33

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 6.

FINANCE INCOME & EXPENSES Air Pacific Group

Finance Income Interest Income Related Parties - Fiji Airlines Limited (controlled entity) - Richmond Limited (jointly controlled entity) Other Parties Unrealised Exchange Gains Realised Exchange Gains Total Finance Income

2008

2009

2008

$’000

50 11,776 5,156 1,321 18,303

616 53 5,095 5,764

771 50 11,776 5,156 1,316 19,069

(3,305)

(2,795)

(3,305)

53 5,095 5,148

(2,795)

Unrealised Exchange Losses Realised Exchange Losses

(7,359) (2,622)

Net Finance (Expense)/Income 7.

2009

Finance Expense Interest Expense Other Parties

Total Finance Expenses

Air Pacific Ltd

(7,359) (2,622)

(12,776)

(3,305)

(12,776)

(3,305)

(7,628)

14,998

(7,012)

15,764

(1,239) (5,894) (7,133)

19,913 (6,727) 13,186

(1,212) (5,854) (7,066)

19,913 (7,347) 12,566

(4,434) 278 (1,016) (1,961) (7,133)

11,825 227 1,134 13,186

(3,796) (75) (1,275) (1,920) (7,066)

12,739 19 (192) 12,566

TAXATION (a) Income Tax (Benefit)/Expense recognised in the Income Statement Current Tax (Benefit)/Expense Deferred Tax (Benefit) Income Tax (Benefit)/Expense Reconciliation of effective tax rate Income Tax at 31% (2008: 31%) Non-deductible Expenses Other Effect of change in tax rate

page 34 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 7.

TAXATION (Continued) Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

(b) Deferred Tax Asset and Liability (i) Recognised Deferred Tax Asset Employee Benefits Allowance for Uncollectability Provisions Fuel Hedge Reserve Unrealised Exchange Loss/(Gain)

2,625 580 4,685 17,769 2,134 27,793

2,464 611 5,721 (1,598) 7,198

2,464 611 6,341 (1,598) 7,818

2,625 580 5,265 17,769 2,134 28,373

A potential deferred tax asset totalling $3.310M (2008: $3.055M) in respect of tax losses not brought to account by the controlled entity will only be obtained if: (i)

the controlled entity derives the future assessable income of a nature and an amount sufficient to enable the benefit to be realised; (ii) the controlled entity continues to comply with the conditions for deductibility imposed by law; and (iii) no changes in tax legislation adversely affect the controlled entity in realising the benefit. (ii) Recognised Deferred Tax Liability Property, Plant & Equipment Unrealised Currency Gain/(Loss)

Net Deferred Tax (Liability)

36,769 1,683

43,316 (1,796)

36,769 1,683

43,316 (1,796)

38,452

41,520

38,452

41,520

(10,659)

(34,322)

(10,079)

(33,702)

page 35

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 7.

TAXATION (Continued) (iii) Movement in Temporary Differences during the Year Air Pacific Group

Property, Plant & Equipment Employee Benefits Allowance for Uncollectability Provisions Unrealised Exchange (Gain)/Loss

Air Pacific Group

Property, Plant & Equipment Employee Benefits Allowance for Uncollectability Provisions Fuel Hedge Reserve Unrealised Exchange Loss

Air Pacific Limited

Property, Plant & Equipment Employee Benefits Allowance for Uncollectability Provisions Unrealised Exchange (Gain)/Loss

Air Pacific Limited

Property, Plant & Equipment Employee Benefits Allowance for Uncollectability Provisions Fuel Hedge Reserve Unrealised Exchange Loss

Balance 1 April 07

Recognised in Income

Recognised in Equity

Balance 31 March 2008

$’000

3,819 127 71 1,411 1,299 6,727

Balance 1 April 08

Recognised in Income

Recognised in Equity

Balance 31 March 2009

$’000

(47,135) 2,337 540 4,310 (1,101) (41,049)

(43,316) 2,464 611 5,721 198 (34,322)

6,547 161 (31) (1,036) 253 5,894

17,769 17,769

(43,316) 2,464 611 5,721 198 (34,322)

(36,769) 2,625 580 4,685 17,769 451 (10,659)

Balance 1 April 07

Recognised in Income

Recognised in Equity

Balance 31 March 2008

$’000

3,819 127 71 2,031 1,299 7,347

Balance 1 April 08

Recognised in Income

Recognised in Equity

Balance 31 March 2009

$’000

(47,135) 2,337 540 4,310 (1,101) (41,049)

(43,316) 2,464 611 6,341 198 (33,702)

6,547 161 (31) (1,076) 253 5,854

17,769 17,769

(43,316) 2,464 611 6,341 198 (33,702)

(36,769) 2,625 580 5,265 17,769 451 (10,079)

page 36 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 7.

TAXATION (Continued) (c) Income Tax (Refund)/Payable Air Pacific Group

Balance at 1 April Income Tax Paid Current Income Tax Over Provision in prior year Balance at 31 March 8.

Air Pacific Ltd

2009

2008

2009

2008

$’000

14,807 (14,765) 3 (1,242) (1,197)

1,271 (6,377) 20,105 (192) 14,807

14,807 (14,765) 30 (1,242) (1,170)

1,271 (6,377) 20,105 (192) 14,807

CASH & SHORT TERM DEPOSITS Cash & Cash Equivalents Term Deposits

15,292 76,316 91,608

31,020 197,988 229,008

14,726 76,316 91,042

29,320 197,988 227,308

The average interest rate on term deposits in 2009 was 2.8 percent (2008: 5.2 percent). The deposits had an average maturity of 187 days (2008: 226 days). 9.

TRADE & OTHER RECEIVABLES Trade Receivables Related Parties - Richmond Limited (jointly controlled entity) Other Parties Allowance for Uncollectability Other Receivables

3 25,991 (2,149) 23,845 93,681 117,526

3 30,451 (2,119) 28,335 29,147 57,482

3 21,778 (1,999) 19,782 92,519 112,301

3 27,817 (1,969) 25,851 28,622 54,473

page 37

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 10.

AIRCRAFT, PROPERTY, PLANT & EQUIPMENT Air Pacific Group

Cost Balance at 1 April 2008 Acquisitions Disposals Balance at 31 March 2009

Aircraft - Leased & Owned $’000

Aircraft Spares $’000

Plant Equipment & Vehicles $’000

Land & Buildings

Total

$’000

269,911 5,646 (243) 275,314

20,793 704 21,497

16,638 1,944 (892) 17,690

23,838 22 23,860

331,180 8,316 (1,135) 338,361

Depreciation, Amortisation & Impairment Balance at 1 April 2008 Depreciation & Amortisation for the year Impairment Loss Disposals Balance at 31 March 2009

111,746

10,782

12,870

8,271

143,669

19,660 1,133 (63) 132,476

1,123 11,905

1,511 (846) 13,535

593 8,864

22,887 1,133 (909) 166,780

Carrying Amount At 1 April 2008 At 31 March 2009

158,165 142,838

10,011 9,592

3,768 4,155

15,567 14,996

187,511 171,581

Aircraft - Leased & Owned $’000

Aircraft Spares

Plant Equipment & Vehicles $’000

Land & Buildings

Total

$’000

236,123 236,123

18,467 690 19,157

16,030 1,708 (871) 16,867

23,203 23,203

293,823 2,398 (871) 295,350

Air Pacific Limited

Cost Balance at 1 April 2008 Acquisitions Disposals Balance at 31 March 2009

$’000

Depreciation & Amortisation Balance at 1 April 2008 Depreciation & Amortisation for the year Disposals Balance at 31 March 2009

107,686

10,549

12,758

8,252

139,245

15,257 122,943

524 11,073

1,382 (837) 13,303

576 8,828

17,739 (837) 156,147

Carrying Amount At 1 April 2008 At 31 March 2009

128,437 113,180

7,918 8,084

3,272 3,564

14,951 14,375

154,578 139,203

page 38 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 10.

AIRCRAFT, PROPERTY, PLANT & EQUIPMENT (Continued) Aircraft Market Values The market values of aircraft tend to fluctuate from year to year. An extended desktop valuation was carried out in March 2007 by AVITAS on jet aircraft to determine the current market values. As at 31 March 2009 there is a surplus between carrying amount and market values. Jet Aircraft (B737-700/800)

Extended Valuation USD $’000

Extended Valuation FJD $’000

Carrying Amount FJD $’000

69,900 72,900

129,932 110,120

113,180 128,437

As at 31 March 2009 As at 31 March 2008

Surplus/ (Deficit) FJD $’000 16,752 (18,317)

Valuations of ATR aircraft were obtained using ASCEND market values. There are no published market values for Twin Otter and Islander aircraft. The market values are based on indicative valuations from aircraft vendors overseas.

Aircraft Type

Valuation USD $’000

Valuation FJD $’000

Carrying Amount FJD $’000

14,300 14,000

26,581 21,148

24,755 23,120

1,826 (1,972)

6,506

4,573

1,933

5,665

6,051

ATR as at 31 March 2009 ATR as at 31 March 2008 Twin Otters & Islanders as at 31 March 2009 Twin Otters & Islanders as at 31 March 2008

(Deficit)/ Surplus

(386)

During the year ended 31st March 2009, an impairment provision of $1,132,518 (2008 : $Nil) was created to reflect the recoverable or fair values of the Otter and Islander aircraft in the Fleet based on indicative values of the aircraft.

11.

ADVANCE TO RELATED PARTIES Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

Advance to Fiji Airlines Limited (controlled entity) Advance to Richmond Limited (jointly controlled entity)

44,888

41,812

872

819

872

819

Total Advances to Related Parties

872

819

45,760

42,631

No interest is charged on $8.0M (2008:$8.0M) of the advance to Fiji Airlines Limited. Interest is charged on the balance of the advance at the rate of 2 percent (2008: 2.5 percent). Interest is charged on the Advance to Richmond Limited at the rate of 6.25 percent (2008: 6.25 percent).

page 39

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 12.

INVESTMENTS Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

Investment in Controlled Entity (At Cost) Balance at 31 March

2,000

Impairment Losses Balance at 1 April Impairment Losses Balance at 31 March

2,000 2,000

Carrying Amount at 31 March

Investment in controlled entity represents 100% shares owned in Fiji Airlines Limited (a company incorporated in Fiji on 27th May 2005 servicing regional and domestic air routes).

Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

Investment in Jointly Controlled Entity Balance at 1 April Share of Losses Balance at 31 March

15,982 (89) 15,893

16,200 (218) 15,982

17,915 17,915

TOTAL INVESTMENT

15,893

15,982

17,915

Investment in Jointly Controlled Entity represents the Company’s 38.75% interest in Richmond Limited pursuant to a Shareholders’ Agreement with Colonial Fiji Life Limited. The principal activity of Richmond Limited is the ownership of the Sofitel Fiji Resort & Spa at Denarau Island in Nadi.

page 40 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 12.

INVESTMENTS (Continued) Investment in Jointly Controlled Entity (continued) The Company’s 38.75% interest in the jointly controlled entity is shown below: Air Pacific Ltd

38.75%

2009

2008

$’000

Current Assets Non-Current Assets

2,041 28,841

2,484 29,115

Total Assets

30,882

31,599

Current Liabilities Non-Current Liabilities

2,139 12,850

2,091 13,526

Total Liabilities

14,989

15,617

Net Assets

15,893

15,982

Total Shareholders’ Equity

15,893

15,982

Revenue Hotel Operating Expenses Net Owners Expenses Net Finance Costs Share of Losses in Jointly Controlled Entity

10,184 (7,384) (1,856) (1,033) (89)

9,846 (7,017) (1,809) (1,238) (218)

Air Pacific Limited and Colonial Fiji Life Limited have provided an unlimited guarantee in respect of Richmond Limited’s borrowing. At 31 March 2009, the borrowing totalled $32.6M (2008: $34.4M) 13.

BORROWINGS Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

23,775

A loan of USD13M was drawn in March 2009 from the ANZ Banking Group Limited for a 12 month period at an interest rate of 4.25%, variable, with the principal repayment due on maturity. Secured against: Rights and interests on term deposits held by Bank of Baroda, Westpac Banking Corporation and Colonial National Bank totalling FJD29M. The Company is in breach of a financial covenant in respect of debt service cover ratio with the Bank. The Bank has confirmed that it does not propose to take any action in respect of the breach.

page 41

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 14.

LEASE LIABILITY The finance lease liability in respect of B737-700/800 aircraft and motor vehicles are allocated between current and non-current elements. The principal component of the lease payments due as at the end of the succeeding financial year is shown as current and the remainder of the liability as non-current. Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

21,717 24,186 45,903 2,902 43,001

18,000 38,046 56,046 4,886 51,160

21,717 24,186 45,903 2,902 43,001

18,000 38,046 56,046 4,886 51,160

19,776 23,225 43,001

15,519 35,641 51,160

19,776 23,225 43,001

15,519 35,641 51,160

8,121 3,726 (2,587) 9,260

7,637 2,665 (2,181) 8,121

7,949 3,548 (2,443) 9,054

7,538 2,592 (2,181) 7,949

6,228 3,032 9,260

4,088 4,033 8,121

6,220 2,834 9,054

4,079 3,870 7,949

18,456 7,494 (9,796) 16,154

13,904 12,813 (8,261) 18,456

18,456 7,494 (9,796) 16,154

13,904 12,813 (8,261) 18,456

1,068 15,086 16,154

6,037 12,419 18,456

1,068 15,086 16,154

6,037 12,419 18,456

The future lease payments under finance leases are: Less than one year Between one year and five years Minimum lease payments Deduct: future finance charges Provided for in the accounts Represented by: Current Non-Current

15.

EMPLOYEE BENEFITS Balance at 1 April Provisions made during the year Provisions utilised during the year Balance at 31 March Represented by: Current Non-Current Current Employee Benefits include annual leave payable and anticipated retirement and long service leave due and payable in the next twelve months. Non-Current Employee Benefits include the balance of retirement and long service leave accruals.

16.

PROVISIONS Aircraft/Engine Overhaul Balance at 1 April Provisions made during the year Provisions utilised during the year Balance at 31 March Represented by: Current Non-Current

page 42 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009

17.

SHARE CAPITAL & RESERVES Air Pacific Group

Authorised Share Capital 100,000,000 Shares of $1 each

Air Pacific Ltd

2009

2008

2009

2008

$’000

100,000

Called & Paid Up

2009 Paid-Up Capital

2008 Paid-Up Capital

Issued and Paid-Up Share Capital Shareholders as at 31 March were:

Government of Fiji Qantas Airways Limited Air New Zealand Limited Government of Kiribati Government of Tonga Government of Samoa Government of Nauru

$’000

13,307,075 12,084,832 505,000 70,400 70,400 32,000 22,800 26,092,507

51.00 46.32 1.94 0.27 0.27 0.12 0.08 100.00

1.00 1.00 1.00 1.00 1.00 1.00 1.00

13,307 12,086 505 70 70 32 23 26,093

51.00 46.32 1.94 0.27 0.27 0.12 0.08 100.00

Earnings per Share (a) Basic earnings per share Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

Attributable to ordinary shareholders

Net (Loss)/Profit attributable to ordinary shareholders Weighted average number of ordinary shares Earnings per Share

(7,170) 26,093 (0.27)

24,964 26,093 0.96

(5,178) 26,093 (0.20)

28,527 26,093 1.09

61,272 (17,769) 43,503

(b) Diluted earnings per Share Diluted earnings per share is the same as basic earnings per share as there are no ordinary shares that are considered diluted. Hedge Reserves Other Financial Liability Deferred Tax Asset Balance at 31 March The hedge reserve comprises the effective portion of the cumulative net change in the fair value of fuel hedging instruments related to hedged transactions that have not yet occurred.

page 43

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 18.

CONTINGENT LIABILITIES Air Pacific Group

Guarantees and letters of credit to support operating lease commitments and other arrangements entered into by the Group and the Company. Bank facilities in respect of the above are secured by a registered mortgage debenture over the Group’s and the Company’s assets.

Air Pacific Ltd

2009

2008

2009

2008

$’000

17,359

14,982

17,359

14,982

The Company will also provide necessary financial support to its controlled entity, Fiji Airlines Limited, in order to fulfil its debt obligations as and when they are due and payable. The Group also has provided an unlimited guarantee in respect of Richmond Limited’s borrowings as described in Note 12. 19.

COMMITMENTS As at balance date the Group and the Company had the following commitments. These commitments are not provided for in the financial statements. (a) The Group and the Company had entered into a nine year operating lease agreement for a Boeing 767-300 Extended Range aircraft effective September 1994 and exercised an extension for a further four years. The lease has been further extended to March 2012 with an option for a 6 month early termination. (b) The Group and the Company entered into five year operating leases for two Boeing 747-400 aircraft with effect from April and June 2003. This has now been extended to July and November 2013 with two 1 year extension options. (c) The following is a summary of future operating lease commitments for aircraft and properties payable by the Group and the Company translated (where applicable) at exchange rates prevailing at balance date:

Air Pacific Group

Less than one year Between one and five years Later than five years

Air Pacific Ltd

2009

2008

2009

2008

$’000

39,377 109,031 15,159 163,567

34,105 62,495 14,010 110,610

38,954 107,853 14,821 161,628

33,789 61,317 13,646 108,752

(d) The Group and the Company entered into a Purchase Agreement with the Boeing Company for the acquisition of eight Boeing 787-9X2 aircraft. The scheduled delivery dates are one (1) each in March/September 2014, one (1) in June & two (2) in September 2015, two (2) in March 2019 & one (1) in December 2019. (e) The following is a summary of future capital commitments for aircraft and properties payable by the Group and the Company translated (where applicable) at exchange rates prevailing at balance date: Between one and five years Later than five years

665,721 2,876,744 3,542,465

1,690,900 1,187,069 2,877,969

665,721 2,876,744 3,542,465

1,690,900 1,187,069 2,877,969

page 44 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 20.

RELATED PARTIES Details of shareholding of major shareholders are provided in Note 17. Transactions with major shareholders are conducted on a commercial basis and comprise the following: • Air Pacific provides passenger travel and freight carriage for the Fiji Government; • On certain Air Pacific routes Qantas codeshares for which it retains a percentage of the revenue for seats sold; • The Fiji Government or its controlled entities provide airport, ground handling, catering, landing and air navigation services to Air Pacific; • Qantas provides ground handling, catering, fuel hedging, insurance purchase and aircraft maintenance services to Air Pacific. Transactions and balances with major shareholders included in the Financial Statements are as follows: Air Pacific Group

QANTAS Revenue Expenditure Trade receivables Other receivables Trade creditors FIJI GOVERNMENT Revenue Expenditure Trade receivables Trade creditors

Air Pacific Ltd

2009

2008

2009

2008

$’000

118,894 22,868 4,461 43,639 4,970

110,594 16,616 3,685 5,505

118,894 22,868 4,461 43,639 4,970

110,594 16,616 3,685 5,505

582 28,362 111 3,747

413 27,129 42 4,611

582 28,362 111 3,747

413 27,129 42 4,611

In addition to the fees and compensation disclosed in Notes 5 and 4, the Directors and Key Management of the Group and the Company receive travel benefits. Key Management Personnel are those individuals that have authority and responsibility for planning, directing and controlling the activities of the Company and the Group. Fiji Airlines Limited is a related party by virtue of it being a controlled entity. Transactions and balances with Fiji Airlines Limited are disclosed elsewhere in the financial statements. Richmond Limited is a related party by virtue of it being a jointly controlled entity. Transactions and balances with Richmond Limited are disclosed elsewhere in the financial statements. 21.

FINANCIAL RISK MANAGEMENT The Air Pacific Group is subject to credit, liquidity, interest rate, foreign exchange and fuel price risk. These risks are an inherent part of the operations of an international airline. The Air Pacific Group manages these risk exposures using various financial instruments and using a set of policies as approved by the Board. The Group uses different methods to assess and manage different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other prices risks, and ageing analysis and sensitivity analysis for credit and liquidity risk. (a) Credit Risk Credit risk relates to the possibility of default by customers and agents in settling their obligation to the Group and the Company. The Group and the Company have established internal policies to determine the creditworthiness and reliability of potential customers. Agents are also required to provide bank guarantees which the Group and the Company can exercise in the event of non-payment of amounts due.

page 45

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 21.

FINANCIAL RISK MANAGEMENT (Continued) Air Pacific Group

Air Pacific Ltd

2009

2008

2009

2008

$’000

15,292 76,316 117,526 45,450 872

31,020 197,988 57,482 36,934 819

14,726 76,316 112,301 40,450 40,360

29,320 197,988 54,473 36,934 42,631

The table below sets out maximum exposure to credit risk as at reporting date. Cash Term Deposits Trade Debtors & Other Receivables Other Deposits Advance to Related Parties (b) Liquidity Risk Liquidity risk is the possibility that the Group and the Company will not be able to meet its financial obligations as they fall due. The Group’s and the Company’s approach to managing liquidity is to ensure, as far as possible, that they will always have sufficient liquidity to meet their liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s and the Company’s reputation. Typically the Group and the Company ensure that they have sufficient cash on demand to meet expected operational expenses for a period of 180 days, including the servicing of financial obligations. In addition, the Group maintains a $15M (2008: $15M) overdraft facility that is unsecured. The following table summarises the contractual maturities of financial liabilities, including interest payments as at reporting date. Financial Liabilities Air Pacific Group

2009 Trade Creditors & Accrued Expenditure Borrowings Lease Liabilities Other Financial Liability

Less than 1 Year

1 to 5 Years

Total

$’000

134,916 23,775 19,776 61,272

23,225 -

134,916 23,775 43,001 61,272

151,970 15,519 -

35,641 -

151,970 51,160 -

2008 Trade Creditors & Accrued Expenditure Borrowings Lease Liabilities Other Financial Liability

page 46 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 21.

FINANCIAL RISK MANAGEMENT (Continued) (b) Liquidity Risk (Continued) Air Pacific Limited

2009 Trade Creditors & Accrued Expenditure Borrowings Lease Liabilities Other Financial Liability

Less than 1 Year

1 to 5 Years

Total

$’000

131,950 23,775 19,776 61,272

23,225 -

131,950 23,775 43,001 61,272

148,590 15,519 -

35,641 -

148,590 51,160 -

2008 Trade Creditors & Accrued Expenditure Borrowings Lease Liabilities Other Financial Liability

(c) Market Risk Market risk is the possibility that changes in market prices, such as foreign exchange rates and interest rates will affect the Group’s and the Company’s result and the value of its holdings of its financial instruments. The following section summarises the Group’s approach to managing these risks. i) Interest Rate Risk Interest rate risk refers to the possibility that the fair value of future cashflows of a financial instrument will fluctuate because of changes in market interest rates. The Group and the Company have exposure to movements in interest rates arising from its interest rate sensitive liabilities, predominantly in USD. As at 31 March 2009, interest bearing liabilities amounted to $66.7M (2008: $51.1M). The fixed/floating split is 64 percent and 36 percent respectively (2008: 100 percent fixed). The following table summarises the impact of reasonably possible changes in interest rates on net profit and equity. For the purpose of this disclosure, the sensitivity analysis assumes a 100 basis points increase in all relevant interest rates. This analysis also assumes that all other variables, including foreign exchange rates remain constant.

page 47

Air Pacific Group Notes to and Forming Part of the Financial Statements for the Year Ended 31 March 2009 21.

FINANCIAL RISK MANAGEMENT (Continued) (c) Market Risk (Continued) i) Interest Rate Risk (Continued) Air Pacific Group

Net Profit 100bps increase in interest rates

Variable rate instruments Interest Expense

Equity

2009

2008

2009

2008

$’000

(167)

Air Pacific Limited

Net Profit 100bps increase in interest rates

Variable rate instruments Interest Expense

Equity

2009

2008

2009

2008

$’000

(167)

ii) Foreign Exchange Risk The Group and the Company is exposed to foreign currency risks on revenues, expenses and borrowings that are denominated in a currency other than the Fiji dollar. There is no means of hedging foreign currency payments exchange risks in Fiji Islands. However the Group and the Company generate sufficient foreign currency revenue to meet their obligations denominated in foreign currencies and all net exposures are monitored by Management. The following table summarises the impact of reasonably possible changes in foreign exchange rates on net profit and equity. The sensitivity analysis assumes a 10% increase and decrease in all currency pairs. The analysis also assumes that all other variables, including interest rates, remain constant. Air Pacific Group

Net Profit

10% increase in all currency pairs 10% decrease in all currency pairs

Equity

2009

2008

2009

2008

$’000

7,793 (7,793)

4,077 (4,077)

7,793 (7,793)

4,077 (4,077)

Air Pacific Limited

Net Profit

10% increase in all currency pairs 10% decrease in all currency pairs

Equity

2009

2008

2009

2008

$’000

7,103 (7,103)

4,077 (4,077)

7,103 (7,103)

4,077 (4,077)

page 48 - air pacific annual report 2009

Air Pacific Group Notes to and Forming Part of the Financial Statements For the Year Ended 31 March 2009 21.

FINANCIAL RISK MANAGEMENT (Continued) iii) Fuel Price Risk Fuel hedging instruments are used to smooth the impact of sudden and significant increases in fuel prices. As at 31 March 2009 28 percent (2008: 12 percent) of forecast fuel exposure less than one year have been hedged. As at 31 March 2009, other financial liabilities include fuel derivatives totalling $61.3M. (2008: $Nil). These are recognised at fair value. The following table summarises the impact of reasonably possible changes in fuel prices on net profit and equity. The sensitivity analysis assumes a 10% increase and decrease in fuel indices. The analysis also assumes that all other variables, including foreign currency exchange rates, remain constant.

Air Pacific Group

Net Profit

10% increase per barrel in fuel indices 10% decrease per barrel in fuel indices

Equity

2009

2008

2009

2008

$’000

(8,914) 8,914

(14,652) 14,652

(8,914) 8,914

(14,652) 14,652

Air Pacific Limited

Net Profit

10% increase per barrel in fuel indices 10% decrease per barrel in fuel indices

Equity

2009

2008

2009

2008

$’000

(8,362) 8,362

(13,612) 13,612

(8,362) 8,362

(13,612) 13,612

(a) Capital Management The Board’s policy is to maintain a strong capital base so as to maintain creditor and market confidence and to sustain future developments of the business. There were no changes to the Group’s approach to capital management during the year. 22.

GOING CONCERN & FINANCIAL SUPPORT The Group and the Company had working capital deficiencies of $70.7m and $73.6m respectively as at 31 March 2009, and incurred deficiencies in operating cash flows of $123.7m and $125.4m respectively and net losses after income tax of $7.2m and $5.2m respectively for the year then ended. The Group and the Company’s continuation as going concerns are dependent upon their ability to maintain appropriate financing and/or to generate sufficient cash flows from operations in order to meet their obligations and to return to profitable operations. In order to address these issues, management has taken necessary actions including arranging additional financing facilities and implementation of expense reduction programmes. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Group and/or Company be unable to continue as going concerns. The directors consider the application of the going concern principle to be appropriate in the preparation of these financial statements as the directors anticipate the lenders will continue to provide necessary financial support and the Group and Company to generate adequate funds to meet their liabilities as and when they fall due.

page 49

23.

EVENTS SUBSEQUENT TO BALANCE DATE On 15 April 2009, the Reserve Bank of Fiji devalued the Fiji Dollar by 20 percent. No adjustment has been made in respect of this in the financial statements for the year ended 31 March 2009. The general effect of the devaluation would include a likely increase in future revenue, an increase in future costs of operations denominated in foreign currencies in Fiji Dollar terms and increases in Balance Sheet items denominated in foreign currencies.

24.

REGISTERED OFFICE The Companyâ&#x20AC;&#x2122;s registered office is located at: Air Pacific Maintenance & Administration Centre Nasoso Road Nadi FIJI ISLANDS

page 50 - air pacific annual report 2009

Air Pacific Limited 5 Year Statistics 2005–2009

The Year in Review FINANCIAL Revenue (000) Expenditure (000) Operating Profit/(Loss) (000) Cost per ATK Yield per RTK Paid up Capital as at 31 March (000) GROUP Revenue (000) Expenditure (000) Operating Profit/(Loss) (000) OPERATIONS Unduplicated Route Km as at 31 March Available Tonne Km (000) AIRCRAFT UTILISATION (Actual Hours per Aircraft Type) B747-400 B767-300 B737-700 B737-800 ATR42-500 TRAFFIC (Excluding Charters to Other Airlines) Passengers Carried Revenue Passenger Kilometres (000) Available Seat Kilometres (000) Revenue Seat Factor Cargo & Excess Baggage Tonne Kilometres (000) Mail Tonne Kilometres (000) Revenue Tonne Kilometres (000) Revenue Load Factor AVERAGE KM FLOWN BY PASSENGER Average all Services PERSONNEL Average Staff Strength Revenue per Employee ATKs per Employee Expenditure per Employee DEFINITIONS ATK: Available Tonne Kilometres RTK: Revenue Tonne Kilometres RPK: Revenue Passenger Kilometres ASK: Available Seat Kilometres Cargo & Excess Baggage Tonne Kilometres: Mail Tonne Kilometres: Revenue Seat Factor: Revenue Load Factor:

2008/09

2007/08

2006/07

2005/06

2004/05

$622,787 $635,031 ($12,244)

$542,841 $501,749 $41,092

$486,706 $476,234 $10,472

$449,389 $427,928 $21,461

$440,651 $404,721 $35,930

86.0c 130.9c $26,093

74.0c 122.7c $26,093

69.9c 109.5c $26,093

62.3c 99.9c $26,093

56.7c 100.9c $26,093

$648,471 $662,774 ($14,303)

$558,422 $520,272 $38,150

$487,682 $482,424 $5,258

57,162 738,109

52,243 678,193

60,072 681,368

58,434 686,516

52,095 713,871

8,591 5,198 3,940 7,179 1,086

7,340 5,134 3,391 7,421 776

7,310 5,320 3,610 8,203 155

7,648 5,369 2,881 7,644 –

7,625 5,226 2,084 7,757 –

658,150 3,730,106 5,654,899 66.0% 73,642 656 475,773 64.5%

614,935 3,404,511 5,169,096 65.9% 72,125 798 442,379 65.2%

642,549 3,451,184 5,190,067 66.5% 69,855 776 444,520 65.2%

596,285 3,310,339 5,188,082 63.8% 324,994 951 449,627 65.5%

595,019 3,353,836 5,093,797 65.8% 220,487 830 436,631 61.2%

5,668

5,536

5,371

5,552

5,637

803 $775,575 919,189 $790,823

804 $675,176 843,524 $624,066

771 $631,266 883,746 $617,683

754 $596,006 910,499 $567,544

747 $589,895 955,651 $541,796

Available payload of the aircraft times the kilometre distance travelled. Total weight of all products carried i.e. passengers, cargo, mail and excess baggage on the aircraft times the kilometre distance travelled. Number of revenue passengers carried times the kilometre distance travelled. Number of saleable seats on the aircraft times the kilometre distance travelled. Total weight of cargo and excess baggage carried times the kilometre distance travelled. Weight of mail carried times the kilometre distance travelled. Revenue Passenger Kilometres expressed as a percentage of Available Seat Kilometres. Revenue Tonne Kilometres expressed as a percentage of Available Tonne Kilometres. Note: All weights are expressed in metric tonnes.

page 51

Air Pacific Limited Offices, general sales agents and cargo

HEAD OFFICE Air Pacific Limited Private Mail Bag Nadi Airport Fiji Islands Phone: (679) 6720777 Fax: (679) 6720512 www.airpacific.com CARGO Air Pacific Limited Nadi Airport, Fiji Islands SUBSIDIARY Pacific Sun Corner of Koromakawa Road CAAFI Compound Nadi Airport Fiji Islands www.pacificsun.com.fj REGIONAL OFFICES: FIJI Air Pacific Limited Ground Floor, CML Building Victoria Parade, Suva Air Pacific Limited Arrival Concourse Nadi Airport

ISRAEL Tal Aviation Limited – Passenger GSA 29 Ben Yehuda Street 63 807 Tel Aviv

U.S.A. & CANADA Air Pacific Limited Suite 490, 6080 Centre Drive Los Angeles, CA 90045

KIRIBATI Pacific World Travel – GSA Lagoon Drive, Bikenibeu Central, Kiribati

Cargo Handling Agent5777 W.Century Blvd Suite # 1610 Los Angeles, CA 90045

Pacific World Travel – GSA Within Tobaraoi, Ronton Village, Kirimati Island Christmas Island

HAWAII Air Pacific Limited 300 Rodgers Boulevard #60 Honolulu International Airport Hawaii 96819

KOREA Holiday Tours & Travel (Korea) Ltd – Passenger GSA 15th Floor Soonhwa Building 5-2 Soonhwa-dong Jung-gu Seoul Korea 100-130 International Air Transport Co., Ltd – Cargo GSA 6th Floor, Sina Building 39-1, Seosomun-dong, Jung-gu, Seoul, Korea 100-752

AUSTRALIA Air Pacific Limited World Aviation Systems–GSA Level 2, 410 Queen Street Brisbane QLD 4000

MALAYSIA Malaysian Airlines System – GSA 3rd Floor, MAS Building Jalan Sultan Ismail Kuala Lumpur 50250

Air Pacific Limited World Aviation Systems–GSA Ground Floor, 310 King Street Melbourne VIC 3000

NETHERLANDS Qantas – GSA Atlanta Building Stadhouderskade 6 Amsterdam

Air Pacific Limited World Aviation Systems–GSA Level 10, 403 George Street Sydney NSW 2000

NEW CALEDONIA Air Pacific Limited Agence de Voyages Jean Brock - GSA 14 Rue George Clemenceau BP 122, 98845, Noumea

HONG KONG Holiday Tour & Travel – GSA Suites 803 – 804, 8th Floor World Finance Centre South Tower, Harbour City Tsimshatsui Kowloon Hong Kong INDIA Griffon Aviation-GSA Shop#4 Cusrow Baug, Colaba, Mumbai 400039 INDONESIA Holiday Tours & Travel – GSA Menara BDN Bldg 11th Flr JL. Kebon Sirih No. 83 Jakarta Pusat 10340

NEW ZEALAND Air Pacific Limited World Aviation Systems-GSA Level 9 Sofrana House 396 Queen Street Auckland Air Pacific Limited Qantas - GSA Ground Floor Price Waterhouse Building 119 Armagh Street Christchurch Air Pacific Limited Qantas – GSA Ground Floor ASB Bank Tower 2 Hunter Street, Wellington

SAMOA Air Pacific Limited Polynesian Airlines-GSA 5th Floor, Central Bank Building, P.O. Box 599 Apia SINGAPORE Holiday Tours & Travel (Korea) Ltd – Passenger GSA 15 Cairnhill Road #07-05, Cairnhill Place Singapore 229650 Cargo Handling AgentInternational Air Cargo Services Pte Ltd Room 230 Sats Airfreight Terminal 2, Core E, Airport Cargo Road P.O.Box 656 Airmail Transit Centre Singapore Changi Airport Singapore 918105

JPK Air Freight Co. LtdCargo GSA, 5th Floor, No.1, Nanking Road East Sec. 3, Taipei THAILAND Holiday Tour & Travel - GSA 942/160-163 Charn Issara Tower 21st Flr Rama 4 Road Surawongse, Bangrak Bangkok 10500 TONGA Air Pacific Limited E.M.Jones Limited-GSA P.O.Box 34, Nuku’alofa UNITED KINGDOM Air Pacific Limited P.O.Box 10013 Polstead, Colchester C06 5WY Qantas–GSA 395/403 King Street Hammersmith, London W69NJ VANUATU Air Pacific Limited Vanuatu Travel Services-GSA C/- South Pacific Travel Anchor House, Kumul Hwy Port Vila VIETNAM Holiday Tour & Travel – GSA Unit 1601, Saigon Trade Centre 37 Ton Duc Thang, District 1 Ho Chi Minh City,Vietnam QANTAS- GSA

SOLOMON ISLANDS Air Pacific Limited Travel Industry Services-GSA City Centre Building Mendana Avenue, Honiara

FRANCE Qantas-GSA 13/15 Boulevard de la Madeleine, Paris

Cargo Handling AgentSolomon Airlines–Freight Henderson Airport

ITALY Qantas-GSA Corso Italia 8, Milan Via Bissolati 54, Rome

TAHITI Qantas - GSA Shop 44, 2nd Floor, Vaima Centre, Plazza Basse P.O.Box 1695 Papeete TAIWAN, ROC Holiday Tours & Travel – Passenger GSA 10F-6, 106, Chang-An West Rd. Taipei 103, Taiwan ROC

GERMANY Qantas-GSA Airport Terminal 2, Level 6 Frankfurt SWEDEN Qantas-GSA Dalagatan 21, 113 24 Stockholm SWITZERLAND Qantas-GSA Loewemstrasse 29 Zurich 8021