Washington, D.C., July 14/Sydney, July 15, 2005—
In a project that fits its long-term strategy of improving infrastructure in developing countries, the International Finance Corporation—the private sector arm of the World Bank Group—announced today that the government of Samoa had signed an agreement with Australia’s award winning low-cost carrier, Virgin Blue. The agreement sets up a new joint venture airline, Polynesian Blue, which will operate the long-haul jet operations of Polynesian Airlines from October 2005. IFC acted as lead adviser to the Samoan government on this transaction.
The transaction is part of a broader government strategy of reforming Samoa’s state-owned enterprises, such as Polynesian Airlines, to promote higher growth through the private sector and create more jobs in the country, by developing the tourist industry.
The announcement of the agreement comes after months of discussions between the two parties. Virgin Blue was selected as the preferred partner in December 2004 through a bidding process developed and supported by IFC. Other bidders included Air New Zealand and Qantas.
Polynesian Blue will be 49 percent owned by the Samoan government and 49 percent owned by Virgin Blue, with the remaining 2 percent held by a Samoan shareholder.
Samoa’s Prime Minister, the Honorable Tuilaepa Sailele Malielegaoi, said, “Polynesian Blue is the outcome of a deliberate and well-structured process that has delivered the best results for our government. We are committed to improving air access to Samoa and ensuring cheaper and more efficient air travel—for Samoans and visitors alike.” He added, “The joint venture will also support tourism and infrastructure development in Samoa. It reflects a statement of intent by this government to promote sectors that will bring the greatest economic and social benefits to the Samoan people. We are very pleased to have Virgin Blue on board with us in this innovative joint venture.”
Agreeing that Polynesian Blue could significantly expand tourism by improving air transport links to Samoa, IFC’s Director for Advisory Services, Bernard Sheahan, observed that it would “also have a strong positive impact on the government’s budget and contribute to the regional objective of better coordinated air services among the islands and the wider South Pacific region.”
Final regulatory approvals from the civil aviation authorities are being processed, and Polynesian Blue’s inaugural flight from New Zealand to Samoa—with connections from Australia—is expected to take off in late October. The carrier will start to sell seats in September.
In structuring this transaction, IFC benefited from DevCo, a multidonor facility supported by the United Kingdom’s Department for International Development, the Dutch Ministry of Foreign Affairs, and the Swedish International Development Cooperation Agency; as well as support from the Private Infrastructure Development Group's (PIDG) Technical Assistance Fund. DevCo and PIDG were established to assist private infrastructure investment contributing to growth and poverty reduction in developing countries. The government of Samoa also received support from the Australian government agency, AusAid, to implement this transaction.
IFC’s Advisory Services Department (
www.ifc.org/advisory)
provides advisory assistance, primarily to governments, on private sector participation in the provision of infrastructure services. The services help establish public-private partnerships through which governments can bridge the need for increased services despite budget constraints and with the benefits of private sector expertise, management, and finance.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s committed portfolio at the end of FY04 was $17.9 billion, with an additional $5.5 billion held for participants in loan syndications.
