Fiji Airways COVID-19 Liquidity Support Facility: Report and Recommendation of the President

Report and Recommendation of the President

to the Board of Directors

Project Number: 54311-001

December 2020

Proposed Loan and Administration of Loan

Air Pacific Limited

Fiji Airways COVID-19 Liquidity Support Facility

(Fiji)

This document contains information that is subject to exceptions to disclosure set forth in ADB's

Access to Information Policy. Recipients should therefore not disclose its contents to third parties,

except in connection with the performance of their official duties. Upon Board approval, ADB will

make publicly available an abbreviated version of this document, which will exclude confidential

business information and ADB’s assessment of project or transaction risk.

CURRENCY EQUIVALENTS

(as of 1 December 2020)

Currency unit

–

Fijian dollar/s (F$)

F$1.00

$0.4827

$1.00

F$2.0716

ABBREVIATIONS

ADB

–

Asian Development Bank

COVID-19

–

coronavirus disease

DFC

–

United States International Development Finance Corporation

EHS

–

environmental, health, and safety

GDP

IATA

–

gross domestic product

International Air Transport Association

ICAO

–

International Civil Aviation Organization

LEAP

–

Leading Asia’s Private Infrastructure Fund

NOTES

(i) The fiscal year (FY) of the Government of Fiji ends on 31 July. "FY" before a

calendar year denotes the year in which the fiscal year ends, e.g., FY2021 ends on

31 July 2021.

(ii) In this report, “$” refers to United States dollars, unless otherwise stated.

Vice-President

Ashok Lavasa, Private Sector Operations and Public–Private

Partnerships

Director General

Deputy Director General

Michael Barrow, Private Sector Operations Department (PSOD)

Christopher Thieme, PSOD

Director

Jackie B. Surtani, Infrastructure Finance Division 2 (PSIF2), PSOD

Team leader

Yeon Su Kim, Investment Specialist, PSIF2, PSOD

Team members

Genevieve Abel, Principal Transaction Support Specialist (Integrity),

Private Sector Transaction Support Division (PSTS), PSOD

Augustus Leo S. Abenoja, Associate Project Analyst, Office of the

Director General–Risk Analytics Unit (OPSD–RAU), PSOD

Erik Aelbers, Senior Country Specialist, Pacific Subregional Office in

Suva, Fiji, Pacific Department

Ian Bryson, Senior Safeguards Specialist, PSTS, PSOD

Julian Chenoweth, Principal Counsel, Office of the General Counsel

Ulritz Uzein Corcuera, Associate Economics Officer, PSTS, PSOD

Aida Khalil Gomez, Senior Safeguards Specialist, PSTS, PSOD

Kuancheng Huang, Senior Transport Specialist, Office of the Cluster

Head–Transport Group SG, Sustainable Development and

Climate Change Department

Kristine Karen Leuterio, Associate Investment Officer, OPSD–RAU,

PSOD

Mohsin Monnoo, Senior Investment Specialist (Syndications), Office

of the Director General–Guarantees and Syndications Unit,

PSOD

Maria Joao Mesquita Pateguana, Senior Investment Specialist,

Private Sector Investment Funds and Special Initiatives

Division, PSOD

Rhea Reburiano-Javier, Social Development Officer (Safeguards),

PSTS, PSOD

Abba Grace Sanchez, Safeguards Officer (Environment), PSTS,

PSOD

Amanda Satterly, Senior Social Development Specialist (Gender and

Development), PSTS, PSOD

In preparing any country program or strategy, financing any project, or by making any designation

of or reference to a particular territory or geographic area in this document, the Asian

Development Bank does not intend to make any judgments as to the legal or other status of any

territory or area.

CONTENTS

Page

PROJECT AT A GLANCE

I. THE PROPOSAL 1

II. THE PROJECT 1

A. Project Identification and Description 1

B. Development Impacts, Outcome, and Outputs 3

C. Alignment with ADB Strategy and Operations 3

D. Project Cost and Financing Plan 4

E. Implementation Arrangements 4

F. Projected Financial and Economic Performance 5

III. THE PROPOSED ADB ASSISTANCE 5

A. The Assistance 5

B. Value Added by ADB Assistance 5

C. Risks 6

IV. POLICY COMPLIANCE 6

A. Safeguards and Social Dimensions 6

B. Anticorruption Policy 7

C. Investment Limitations 7

D. Assurances 8

V. RECOMMENDATION 8

APPENDIXES

1. Design and Monitoring Framework 11

2. List of Linked Documents 13

Project Classification Information Status: Complete

PROJECT AT A GLANCE

Source: Asian Development Bank

This document must only be generated in eOps. 11112020114444104125 Generated Date: 27-Nov-2020 9:20:58 AM

1. Basic Data Project Number: 54311-001

Project Name

Fiji Airways COVID-19 Liquidity

Support Facility

Department/Division

PSOD/PSIF2

Country

Fiji, Republic of

Borrower

Air Pacific Limited

Portfolio at a Glance

https://www.adb.org/Documents/

LinkedDocs/?id=54311-001-Port

AtaGlance

2. Sector Subsector(s) ADB Financing ($ million)

Transport Air transport 40.00

Total

40.00

3. Operational Priorities Climate Change Information

Accelerating progress in gender equality

Fostering regional cooperation and integration

GHG reductions (tons per annum) 0

Climate Change impact on the Project Low

ADB Financing

Adaptation ($ million) 0.00

Mitigation ($ million) 0.00

Cofinancing

Adaptation ($ million) 0.00

Mitigation ($ million) 0.00

Sustainable Development Goals Gender Equity and Mainstreaming

SDG 5.4

SDG

8.5

Effective gender mainstreaming (EGM)

Poverty Targeting

General Intervention on Poverty

4. Nonsovereign Operation Risk Rating

Obligor Name Obligor Risk Rating Facility Risk Rating

Air Pacific Limited

5. Safeguard Categorization Environment: C Involuntary Resettlement: C Indigenous Peoples: C

6. Financing

Modality and Sources Amount ($ million)

ADB 40.00

Nonsovereign LIBOR Based Loan (Regular Loan): Ordinary capital resources 40.00

Cofinancing 40.00

Leading Asia's Private Infrastructure Fund (LEAP) (Full ADB Administration) 25.00

Others

243.00

Total 308.00

Currency of ADB Financing:

US Dollar

Derived by deducting ADB financing and Cofinancing from Total Project Cost.

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed loan of

up to $40,000,000 to Air Pacific Limited, trading as Fiji Airways, for the Fiji Airways COVID-19

Liquidity Support Facility Project in Fiji. The report also describes the proposed administration of

a loan of up to $25,000,000 to be provided by the Leading Asia’s Private Infrastructure Fund

(LEAP),

and if

the Board approves the proposed loan, I, acting under the authority delegated to

me by the Board, approve the administration of the LEAP loan.

2. The loan, to be guaranteed by Fiji, will cover Fiji Airways’ fixed costs during the operational

shutdown, and the working capital requirements for a 2021 ramp-up and restoration of its flight

services. Since March 2020, the flight operations of Fiji Airways have been severely interrupted

by global travel restrictions because of the coronavirus disease (COVID-19) pandemic. The

project supports Fiji Airways’ effort to sustain its business through this crisis and return to

profitable operations. Fiji Airways is the South Pacific’s leading airline with a strong safety record,

a new aircraft fleet, and a history of profitable operations. It provides essential transport for Fiji

and other small island developing states in the South Pacific, and is a foundation for economic

and social development in the region.

II. THE PROJECT

A. Project Identification and Description

3. Project identification. Fiji Airways, Fiji’s national flag carrier airline, is the Pacific’s largest

regional airline, accounting for 65% of international seat capacity to Fiji and 60% of interregional

seat capacity, connecting the South Pacific to Australia, New Zealand, the United States, and

Asia. It provides the majority of international seat capacity to Kiribati and Tuvalu (fragile and

conflict-affected situation countries), a substantial proportion of capacity to Samoa, Tonga, and

Vanuatu, as well as most domestic flights connecting the Fijian islands. It also provides access to

basic commodities and social services by importing essential goods and allowing the local

population to connect to other parts of the world. It is therefore a fundamental transport

infrastructure for the Fijian and regional economies, which depend on tourism and exports.

4. Fiji Airways contributes to regional coordination and integration. Because Fiji is a large

and important Pacific regional distribution center, the carrier facilitates regional emergency

response and recovery efforts, including recovery from periodic regional cyclones. Fiji Airways

also plays a critical role in providing access to Fiji’s health care facilities for people from other

Pacific countries, notably Kiribati and Tuvalu, and to tertiary care outside the region, particularly

in Asia, Australia, and New Zealand.

5. Prior to the pandemic, Fiji Airways had experienced strong passenger and revenue growth

and was profitable for 8 years through 2019. The airline has a new aircraft fleet and a strong safety

record, with no aircraft accidents resulting in aircraft losses or passenger fatalities.

6. Impact of COVID-19. The unprecedented global crisis caused by COVID-19 has crippled

the aviation and tourism industries. Travel restrictions imposed by governments worldwide to halt

the rapid spread of the disease, coupled with consumer reluctance to travel, have crushed

international travel demand, resulting in most airlines grounding most of their aircraft.

Financing partner: Japan International Cooperation Agency.

As defined by the International Civil Aviation Organization (ICAO), Annex 13.

7. Fiji Airways has been affected by COVID-19 since the beginning of 2020, starting with

weak demand in Asian markets; extending to core markets in Australia, New Zealand, and the

United States; and culminating in the government-imposed shutdown on 22 March 2020 of all

regularly scheduled Fijian international and domestic flights. As a consequence, Fiji Airways

suspended international and regional passenger flights until the end of December 2020. The

biggest question now is how long the COVID-19 impact will last and whether the airline has

enough cash reserves to tide it through. Against this backdrop, the Asian Development Bank

(ADB) was requested to provide liquidity support to Fiji Airways to meet its operational cash

requirements until normal flight operations can resume.

8. Project design.

[CONFIDENTIAL INFORMATION DELETED]

9. Fiji Airways resumed domestic flights in April 2020 and is now flying regularly scheduled

domestic flights at 50% normal capacity. It also instituted regular international cargo service

flights, including current weekly operations to Sydney; Auckland; Los Angeles; Hong Kong, China;

and Singapore. Its cargo services assure continued supply of medical and other critical imports

to the South Pacific as well as exports of fresh produce, seafood, and garments. It has started to

rehire cabin crew to train and prepare for a resumption of international flights. Fiji Airways

coordinated recovery and logistics planning with the Government of Fiji, Airports Fiji, and Fijian

hotels. They all are completing preparations for a return to international service at an appropriate

time between the fourth quarter of 2020 and the second quarter of 2021 with a “Travel Ready”

program targeted at New Zealand and Australia that includes pre-departure health screening,

online check-in, “wellness” staff on each flight, adapted in-flight procedures, “corridor” customs

processing and transport in Fiji, dedicated Fijian resort packages by nationality, and a marketing

campaign. This effort included work with ADB on coordinating COVID-19 recovery programs and

assistance, including technical assistance to Fiji Airports in airport planning and aviation security.

10. Borrower. Fiji Airways is predominantly a passenger airline (passengers accounted for

83% of revenues in 2019), and its strategy is to be the leading airline connecting the South Pacific,

where it served 19 direct destinations before the outbreak of COVID-19.

[CONFIDENTIAL INFORMATION DELETED]

Its business model is to provide a quality and reliable Pacific regional air service based on its

modern, fuel-efficient fleet, which includes A350s and Boeing 737 MAX 8s. As stated before (para.

5), it has a strong safety record with no aircraft accidents resulting in passenger deaths or aircraft

hull losses.

11. Following the appointment of a new chief executive officer in 2015, Fiji Airways embarked

on a program of quality service, fleet renewal, and network expansion, boosting passengers by

27% over 5 years, to 1.7 million in 2019, and opening up new direct weekly routes connecting the

Pacific to North America (San Francisco), Australia (Adelaide), and Asia (Singapore and Tokyo).

In December 2018, Fiji Airways became a OneWorld connect partner and in mid-2019 attained

the Skytrax 4-Star quality rating.

[CONFIDENTIAL INFORMATION DELETED]

ADB. Regional: Pacific Economic Management (Phase 3).

12. ADB conducted integrity due diligence.

Fiji Airways, its shareholders, and its

management do not appear to constitute a significant or potentially significant integrity risk as

there are no unresolved adverse media or relevant information related to them. ADB’s review of

Fiji Airways does not give ADB cause to believe that it is being used for money laundering,

terrorism financing, tax secrecy, tax evasion, or tax fraud. Tax integrity due diligence was not

required.

13. Guarantor. The project will benefit from a sovereign guarantee provided by Fiji covering

the total principal amount of the ADB loan; it was approved by the Parliament of Fiji on 26 May

2020. This gives significant support to the project, since the borrower’s revenue-generating ability

was severely curtailed and remains uncertain because of the ongoing COVID-19 crisis.

14. Fiji is one of the most developed economies in the Pacific, and tourism has been the main

driver of economic activity and foreign direct investment, contributing gross domestic product

(GDP) per capita of $6,141 in 2019. The economy is projected to contract by 19.8% in 2020

and

to grow by 1.0% in 2021 under COVID-19 (based on a gradual revival of international travel from

the second quarter of 2021). Tax cuts to boost economic activity and tourism, reduced

government revenue as the economy contracts, and increased spending to counter COVID-19

impacts are projected to widen the fiscal deficit to 20.2% of GDP in fiscal year (FY) 2021 (FY2019:

–3.6%, FY2020: –8.2%). Public debt as a ratio of GDP was 49.3% at the end of FY2019 and is

projected to reach 65.6% of GDP in FY2020, and 83.4% of GDP in FY2021. To mitigate this, Fiji

is increasing its engagement with development partners, led by ADB, to access lower-cost

financing accompanied by technical assistance. It is also working closely with the International

Monetary Fund, which carries out regular country surveillance and continues to assess Fiji’s

public debt as being sustainable.

B. Development Impacts, Outcome, and Outputs

15. Impacts. The project is aligned with the following impact: Fiji’s status as a vibrant and

modern regional and international hub for people and cargo movement enhanced, as suggested

by the 5-year and 20-year National Development Plan.

16. Outcome. The project will have the following outcome: international and domestic air

transport movements of passenger and goods restored and sustained.

17. Outputs. The project will have the following outputs: (i) Fiji Airways’ liquidity crisis caused

by COVID-19 avoided, (ii) workers’ livelihood secured and gender equality enhanced, and

(iii) gender equality of the work environment enhanced.

C. Alignment with ADB Strategy and Operations

18. Consistency with ADB strategy and country strategy. The project is consistent with

ADB’s Strategy 2030 because it fosters regional cooperation and integration. By supporting Fiji

Airways, a core transport pillar in the South Pacific, ADB will help preserve connectivity and access

ADB. 2003. Enhancing the Asian Development Bank's Role in Combating Money Laundering and the Financing of

Terrorism. Manila.

ADB. 2020. Asian Development Outlook Update: Wellness in Worrying Times. Manila (updated on 15 September).

International Monetary Fund. 2020. Assessment Letter for the Asian Development Bank and Asian Infrastructure

Investment Bank. Washington, DC.

Government of Fiji, Ministry of Economy. 2017.

5-Year and 20-Year National Development Plan. Suva.

The design and monitoring framework is in Appendix 1.

to air transport for Fiji and Pacific small island developing states. The project also promotes private

sector-led growth in Fiji and, through the gender measures captured in the agreed gender action

plan, gender equality. It is categorized as effective gender mainstreaming. The project mobilizes

an ADB interdepartmental team to integrate well-established knowledge and contacts in Fiji with

a private sector financial structure.

19. The project complements PARD’s long-term, close relationship with the Government of

Fiji as its leading multilateral partner. ADB’s country partnership strategy, 2019–2023 for Fiji

highlights the importance of promoting private sector investment and growth, including by

promoting domestic and regional connectivity through transport infrastructure, and specifically

highlighting the need for enterprises that are partly or fully owned by the state to access finance

on commercial terms where feasible, including through potential ADB nonsovereign operations.

The transaction also complements the $200 million policy-based loan for subprogram 3 of the

Sustained Private Sector-Led Growth Reform Program, which was approved by the ADB Board

of Directors in July 2020, and is built on reforms to improve fiscal management, the performance

of state-owned enterprises, and the business and investment climate.

20. Consistency with sector strategy and relevant ADB operations. The project is in line

with ADB’s Sustainable Transport Initiative, through which ADB intends to substantially expand

the scale, influence, and effectiveness of its support for regional cooperation.

The initiative also

emphasizes private sector participation as an integral part of mainstreaming sustainable transport

in ADB’s developing member countries.

21. Lessons from previous operations. The project will be ADB’s first nonsovereign

financing in Fiji, and its first to an airline. The project benefits from PARD’s leading experience in

Fiji as well as ADB’s experience in structuring and implementing air transport infrastructure such

as the Mactan Cebu International Passenger Terminal Project (Philippines).

[CONFIDENTIAL INFORMATION DELETED]

22. State-owned enterprises. Since 2012, Fiji Airways has developed into a successful, well-

managed, and partially privatized company with an established history of profitable operations,

independently audited by PricewaterhouseCoopers. It has demonstrated its ability to compete on

an equal footing and without subsidy against leading international airlines such as Air New

Zealand, Qantas, and Virgin Australia, serving as an example in the Pacific region for a well-

managed state-owned enterprise. ADB’s assistance, reflecting government and international

support to the global air industry during this COVID-19 crisis, will help prepare Fiji Airways’ return

to profitable operations in the post-pandemic global economy. Fiji Airways already reflects the

reforms that Fiji is promulgating with regard to its state-owned enterprise sector.

D. Project Cost and Financing Plan

23. Project scope.

[CONFIDENTIAL INFORMATION DELETED]

E. Implementation Arrangements

24. Table 2 summarizes the implementation arrangements.

ADB. 2010. Sustainable Transport Initiative – Operational Plan. Manila.

Details of Implementation Arrangements (accessible from the list of linked documents in Appendix 2).

Table 2: Summary of Implementation Arrangements

Aspects

Arrangements

Regulatory framework

As a signatory to the ICAO Convention on International Civil Aviation, Fiji has

an obligation to promulgate regulations and standards in accordance with the

ICAO Standards and Recommended Practices. These are reflected in Fiji’s

Civil Aviation Acts (1977), which are administered by Fiji’s Department of Civil

Aviation under the Office of the Solicitor-General. The department is

responsible for managing bilateral and multilateral air services agreements. It

also oversees the Civil Aviation Authority of Fiji, which is responsible for the

technical regulation of aviation in Fiji. Fiji Airways is subject to regulation by the

Fijian Competition and Consumer Commission for consumer ticket pricing. As a

member IATA, Fiji Airways is bound to the IATA Operational Safety Audit

Program. Fiji Airways has code-sharing arrangements with 14 other airlines,

which also require reciprocal independent audits.

Management

Fiji Airways is managed by an internationally experienced team of chief

executive, chief operations officer, chief financial officer, and general counsel;

and 8 executive managers. Fiji Airways promotes gender equality, recently

reinforcing the number of women in senior management (7 out of 28).

Operational arrangements

[CONFIDENTIAL INFORMATION DELETED]

Safety management

system

According to the audit results conducted by IATA, all employees have received

training in the safety management system principles. A healthy reporting

culture was observed, and Fiji Airways is fully committed to the continual

improvement of the safety management system.

IATA = International Air Transport Association, ICAO = International Civil Aviation Organization.

Sources: Asian Development Bank and Fiji Airways.

F. Projected Financial and Economic Performance

[CONFIDENTIAL INFORMATION DELETED]

III. THE PROPOSED ADB ASSISTANCE

A. The Assistance

25. ADB’s assistance consists of (i) a secured corporate loan of up to $40 million from ADB’s

ordinary capital resources and (ii) a parallel loan of up to $25 million, to be provided by LEAP and

administered by ADB.

[CONFIDENTIAL INFORMATION DELETED]

B. Value Added by ADB Assistance

26. ADB’s participation in the project will add substantial value in the following ways:

(i) Its assistance will play a key role in Fiji Airways’ financing efforts, supported by the

Government of Fiji, to ensure that Fiji Airways transitions through the COVID-19

crisis and emerges with the capability to resume its key role in transport

infrastructure for Fiji and other Pacific countries.

(ii)

[CONFIDENTIAL INFORMATION DELETED]

(iii) ADB will contribute to promoting gender equality at Fiji Airways by enhancing

women’s participation in technical and managerial roles as well as developing a

policy to tackle and mitigate gender-based violence. The project achieves effective

gender mainstreaming categorization.

(iv) [CONFIDENTIAL INFORMATION DELETED]

(v) With ADB’s engagement, Fiji Airways agreed to implement a corrective action plan

to improve the management of environmental risks in its premises, and to improve

the implementation of existing plans and procedures.

C. Risks

[CONFIDENTIAL INFORMATION DELETED]

IV. POLICY COMPLIANCE

A. Safeguards and Social Dimensions

27. In compliance with the requirements of its Safeguard Policy Statement (2009) for general

corporate finance, ADB categorized the project as C for environment, involuntary resettlement,

and indigenous peoples.

This categorization is based on the understanding that (i) ADB’s

proceeds will not be used by Fiji Airways to upgrade, purchase, manufacture new or

decommission existing aircraft, open new routes, or acquire land; and (ii) funds will be used only

to fill the company’s liquidity gap and restore flight operations. Therefore, impacts in addition to

those associated with normal pre-pandemic operations are not envisaged. Key environmental

impacts and risks associated with Fiji Airways’ operations include air emissions, noise,

occupational and public health and safety (including the spread of COVID-19), and wastewater

and waste generation associated with routine flight operations, and aircraft and building

maintenance activities performed directly by the company (including refueling of ground vehicles,

minor maintenance, and cleaning of aircrafts and hangars).

28. ADB performed a risk-based environmental and social management system audit and

corporate audit against the requirements of ADB’s Safeguard Policy Statement and the

environmental, health, and safety (EHS) guidelines of the World Bank Group for airlines. Fiji

Airways has a dedicated safety, security, and quality team to manage the EHS aspects of its

operations and systems. It has an occupational health and safety policy, an environmental policy,

and uses the Rolls-Royce Safety Management System solution to record EHS risk assessments,

and incidents and associated reports, and monitor performance indicators. Management systems,

plans, and procedures follow the requirements of the Civil Aviation Authority of Fiji, International

Air Transport Association (IATA), and OneWorld standards. IATA performs biannual operational

safety audits of Fiji Airways’ operations. The “Travel Ready” program follows World Health

Organization advice along with recommendations by IATA and the International Civil Aviation

Organization (ICAO).

29. Fiji Airways monitors fuel consumption and carbon dioxide emissions. Fiji Airways has

emissions reduction targets to reduce potential climate change impacts. It files annual reports

under IATA's FRED+ (fuel reporting and emissions database) platform, and will prepare the first

CORSIA (carbon offsetting and reduction scheme for international aviation) report in 2020 as a

voluntary initiative. Fiji Airways has internationally compliant standard operating procedures for

noise abatement and, with Airports Fiji, rolled out management measures to prevent bird

collisions. It also implemented plans for emergency procedures, and for handling and control of

dangerous goods, or hazardous waste materials. Aircraft disinfection is performed in line with

Australian and New Zealand biosecurity procedures.

ADB. Safeguard Categories.

30. ADB’s corporate audit also concluded that Fiji Airways’ management system and plans

address the impacts and risks associated with the company’s normal pre-pandemic operations.

The institutional capacity and commitment of the company to manage the project’s social and

environmental impacts are deemed adequate.

[CONFIDENTIAL INFORMATION DELETED]

31. Fiji Airways will observe ADB’s prohibited investment activities list and will comply with the

Safeguard Policy Statement. It will comply with national labor laws and, pursuant to ADB’s Social

Protection Strategy (2001), will take measures to comply with internationally recognized core

labor standards.

It will report annually to ADB on (i) its and its contractors’ compliance with such

laws and standards, and (ii) the measures taken. Information disclosure and consultation with

affected people, if needed, will be conducted in accordance with ADB requirements.

32. Effective gender mainstreaming. Fiji has made a number of specific international and

national commitments to gender equality, but gender inequality remains rooted in traditional

norms, customs, and models of decision making that are perpetuated by discriminatory practices,

legislative and policy biases, and unequal access to resources and services. The gender gaps in

labor force participation in Fiji are also significant: in 2015, most men aged 15 and above (81%)

were employed or actively looking for work, compared with less than half of women (46%).

33.

[CONFIDENTIAL INFORMATION DELETED]

Fiji Airways operates a company-wide anti-sexual harassment policy. Following ADB’s Policy on

Gender and Development (1998), it has incorporated measures to promote gender equality and

women’s empowerment in its business activities. Key features of the gender action plan are to (i)

increase the number of women in technical roles; (ii) train female cadets for the first time in its

new Fiji Airways Aviation Academy; (iii) increase the number of women in management roles; (iv)

develop and implement a gender inclusion policy to increase the proportion of women recruited,

retained, and promoted, particularly in technical and management roles; and (v) develop and

implement a family violence policy. Fiji Airways will submit periodic reports on its implementation

of gender measures to ADB.

B. Anticorruption Policy

34. Fiji Airways was advised of ADB’s policy of implementing best international practice

relating to combating corruption, money laundering, and the financing of terrorism. ADB will

ensure that the investment documentation includes appropriate provisions prohibiting corruption,

money laundering, and the financing of terrorism, and remedies for ADB in the event of

noncompliance.

C. Investment Limitations

35. The project will be ADB’s first nonsovereign transaction in Fiji and the first in the airline

industry. The proposed loan is within the medium-term, country, industry, group, and single

exposure limits for nonsovereign investments.

ADB. 2003. Social Protection. Manila (adopted in 2001).

Summary Poverty Reduction and Social Strategy (accessible from the list of linked documents in Appendix 2).

D. Assurances

36. Consistent with the Agreement Establishing the Asian Development Bank (the Charter),

ADB will proceed with the proposed assistance upon establishing that the Government of Fiji has

no objection to the proposed assistance to Fiji Airways. ADB will enter into suitable finance

documentation, in form and substance satisfactory to ADB, following approval of the proposed

assistance by the ADB Board of Directors.

V. RECOMMENDATION

37. I am satisfied that the proposed loan would comply with the Articles of Agreement of the

Asian Development Bank (ADB) and recommend that the Board approve the loan of up to

$40,000,000 from ADB’s ordinary capital resources to Air Pacific Limited, trading as Fiji Airways,

for the Fiji Airways COVID-19 Liquidity Support Facility Project, with such terms and conditions

as are substantially in accordance with those set forth in this report, and as may be reported to

the Board.

Masatsugu Asakawa

President

10 December 2020

ADB. 1966. Agreement Establishing the Asian Development Bank. Manila.

Appendix 1 9

DESIGN AND MONITORING FRAMEWORK

Impact the Project is Aligned with

Fiji’s status as a vibrant and modern regional and international hub for people and cargo movement

enhanced (5-year and 20-year National Development Plan)

Results Chain

Performance Indicators

Data Sources and

Reporting

Mechanisms

Risks and Critical

Assumptions

Outcome

International

and domestic

air transport

movements of

passenger and

goods restored

and sustained

By 2023:

a. Number of international

passengers carried by Fiji

Airways

b. Number of domestic passengers

carried by Fiji Airways

sustained

c. Volume of cargo transported by

Fiji Airways sustained

[CONFIDENTIAL

INFORMATION DELETED]

Company’s annual

development

effectiveness

monitoring report

Prolonged CОVID-

19 crisis further

extends travel

restrictions.

Outputs

1. 1. Fiji Airways'

liquidity crisis

caused by

COVID-19

avoided

2. 2. Workers’

livelihood

secured and

gender equality

enhanced

By 2023:

[CONFIDENTIAL

INFORMATION DELETED]

Company’s annual

development

effectiveness

monitoring report

Prolonged national

emergencies or

force-majeure

events restrict the

company’s

operations beyond

expectations.

10 Appendix 1

Key Activities with Milestones

Outputs 1–2: Fiji Airways liquidity crisis caused by COVID-19 avoided, workers’ livelihood

secured, and gender equality enhanced.

[CONFIDENTIAL INFORMATION DELETED]

Output 3: Gender equality of the work environment enhanced

[CONFIDENTIAL INFORMATION DELETED]

Inputs

ADB: up to $40 million (ordinary capital resources loan)

Leading Asia’s Private Infrastructure Fund: up to $25 million

ADB = Asian Development Bank, COVID-19 = coronavirus disease, OP = operational priority, Q = quarter.

Government of Fiji. Ministry of Economy. 2017. 5-Year and 20-Year National Development Plan. Suva.

Contribution to Strategy 2030 Operational Priorities

Expected values and methodological details for all OP indicators to which this project will contribute results are

detailed in Contribution to Strategy 2030 Operational Priorities (accessible from the list of linked documents in

Appendix 2). In addition to the OP indicators tagged in the design and monitoring framework, this project will

contribute results for OP 7.1.2: Measures to improve the efficiency and/or productivity of cross-border connectivity

supported in implementation (number).

Source: Asian Development Bank.

Results Chain

Performance Indicators

Data Sources and

Reporting

Mechanisms

Risks and Critical

Assumptions

3. Gender

equality of the

work

environment

enhanced

3a. Gender inclusion policy on how

to increase the proportion of

women recruited, retained, and

promoted (particularly in

technical and management

roles) developed and integrated

into guidelines (2020 baseline:

no policy) (OP 2.3.2)

3b. A family violence policy

developed and implemented

(2020 baseline: no policy)

(OP 2.2.3)

Appendix 2 11

LIST OF LINKED DOCUMENTS

https://www.adb.org/Documents/RRPs/?id=54311-001-4

1. Sector Overview

2. Contribution to Strategy 2030 Operational Priorities

3. Country Economic Indicators

4. Summary Poverty Reduction and Social Strategy

5. Gender Action Plan

[CONFIDENTIAL INFORMATION DELETED]