The Tongan government is assessing the possibility of ceasing Lulutai Airlines services due to its inability to meet financial obligations, the Minister for Public Enterprises says. The news follows serious concerns among public servants after revelations that Lulutai had borrowed millions of their retirement funds. The Minister for Public Enterprises, Piveni Piukala, said Lulutai Airlines service was taking a nosedive. He said the government-sponsored company’s operation was “very cloudy”. He also said the airline’s management has asked for $7 million (US$2.90 million) to revive the company. “In a scenario where there is no $7 million(US$2.90 million), the company must be wound up,” Piukala said during a media briefing last week. Piukala said that the biggest challenge they faced while reviewing Lulutai was that the previous governments had invested approximately $21 million(US$8.71 million) in it. He said he had just learned of a $10 million(US$4.14 million) loan the airlines secured from the Retirement Fund Board. He stated that out of the $10 million(US$4.14 million), $6 million(US$2.48 million) was spent on the new Twin Otter, while $4 million (US$1.65 million) was allocated for share purchases. The Prime Minister said the government was reviewing the airlines to assess its financial viability. PM Eke wanted to understand Lulutai’s operational capabilities, including assessing the staff to determine whether they possess the necessary qualifications. The news follows revelations about civil servants’ concerns regarding their retirement funds and whether Lulutai Airlines could repay its loans. Eke previously said in an interview with Kaniva News that Lulutai’s loan from the Retirement Fund Board might be secure because the government guaranteed it. However, he was concerned about the airline’s lack of transparency and the allegations of associated financial losses. He said that if Lulutai failed to repay the money, the government would need to reallocate funds from other parts of the budget, which would be a problem. Lulutai Airlines has been controversial since its inception in 2020 by the Tu’i’onetoa government, in which most of the outgoing Cabinet Ministers were members. Experts, including assessors from the IMF, said that airlines in the Pacific Islands are generally not profitable ventures, except for Fijian airlines, in which Qantas holds a 46 percent share. Lulutai has been accused of providing poor service, failing to communicate effectively with customers, and not offering an online service for passengers. If Lulutai were to be liquidated, it would become the 14th airline to be shut down in the kingdom. Lulutai employs Real Tonga director as interim CEO to assist in airlines review process Lulutai has officially appointed the director of Real Tonga Tevita Palu as its interim chief executive officer. The Tongan government has terminated the contract of former CEO Poasi Tei at Lulutai The Minister for Public Enterprises has confirmed that Palu was brought in because of his expertise in aircraft services. The government expected Palu to conduct a review and provide a report on Lulutai Airlines’ current technical and mechanical status and forecast of its future performance, the Minister for Public Enterprises, Piveni Piukala said. As Kaniva News reported Thursday, the government has been really concerned about the airline’s operation, with Piukala describing it as nosediving and “very cloudy.” He said the government was assessing the possibility of winding up the company. Piukala said that the previous governments had invested approximately $21 million (US$8.71 million) in the airlines, an investment he questioned regarding its reliability. In the year 2013, the government of Tu’ivakanō entered into a partnership with Real Tonga to establish a national airline dedicated to meeting domestic transportation needs. The move forced Chathams Pacific, a New Zealand-owned company that operated Tonga’s sole domestic airline, to pull out. After about seven years, in 2020, the Tu’i’onetoa government decided to establish a government-owned airline, leading to the creation of Lulutai. Palu previously said Real Tonga had been put out of operation by Covid-19 and local politics. He said that with the border open, a safe and reliable air service was needed. Palu said aircraft from New Zealand were readily available for delivery to Tonga and were waiting on Tongan Government approval. He said he had met with several authorities, including the Prime Minister, the Minister Civil Aviation and the Minister of Finance to seek their support.