Thursday, 11 October 2007 11:17 AM

Airlines Board Chairman says Contract Justifiable

The Opposition Finance and Treasury spokesman joins other Parliamentary colleagues in criticizing the contractual arrangement between Solomon Airlines and its Finance Controller.

Public critics come amidst the cost of paying the person appointed, and the fact that the Airlines is in a very weak financial condition.

Speaking on the issue, Mr. Edward Huni'ehu said new wage policy of one-point-three million dollars package applied in Solomon Airlines is outside the principle objective of the State Owned Enterprise Bill 2007.

He adds that government policy must not be allowed to remain unregulated, stressing that whilst the practice of an open wage policy could be justified, this should not be allowed in Solomon Islands as yet as most Government State Owned Enterprise cannot afford such huge wage levels.

"Solomon Airlines has multi-faceted problems, the other problem is overall management, the other is leasing of aircraft that are not profitable and determining various other management and marketing issues within that organization."

But Solomon Airlines Board Chairman, Rick Hou, in a public statement, said a combination of unwise business decisions, bad management and misuse of company resources resulted in the Airlines' "very weak financial condition".

Mr. Hou said Airlines' losses totaled $55 million in the first eight months of this year and of this, international operations were in deficit by $34 million, domestic operations lost $8 million, and overhead costs amounted to $13 million.

"This information has only become available in the last few weeks, as a direct result of the appointment of the Financial Controller," he said.

He said following discussions with the chief executive on the fate of the Airlines, the Board decided that financial management must be strengthened as a matter of urgency before any more comprehensive reform and reconstruction of the Airlines could be undertaken.

Since his appointment at the end of August, the Financial Controller, Baoro Koraua, "who met all the Board's requirements", revitalized the Airlines' finance department, resurrected controls that had lapsed, drawn staff back into proper working procedures and reconstructed information flows and financial reporting systems.

Mr. Hou said the Board was aware that such persons would likely be operating in a regional rather than a national job market and would need to be paid accordingly.

"It was essential to move quickly to prevent Solomon Airlines from becoming insolvent," he said.