KINGSTON — The operation of Air Jamaica’s routes has been blamed for US$32 million of the estimated US$70 million loss by Caribbean Airlines last year, according to Trinidad and Tobago’s Finance Minister Larry Howai.
“On the Jamaica route, it has cut flights to Jamaica and on the London route, it has terminated the wet-leasing arrangement,” Howai said, adding he expects to “significantly reduce the losses of the airline during this year”.
Caribbean Airlines, which began operations in 2007, acquired Air Jamaica in 2011. The Jamaican government has a 16 per cent stake in the Trinidadian air carrier.
Howai said his government had received from CAL a restructuring outline to deal with the losses, adding “we also intend to introduce significant restructuring of a lot of the routes and we have started that process with Air Jamaica and the Jamaican route.
“The Jamaican Government has indicated concern with that and we have undertaken to send a high level team to Jamaica to discuss it with them (early June). We’ll discuss it with them but as of now we are rationalising those routes to bring down costs.”
Howai told the T&T Senate on Tuesday that the US$70 million loss did not include the US$40 million in fuel subsidy to the airline, even though he insisted that the airline remained solvent.
“Government has made certain provisions for the airline to restructure its balance sheet. One of the things they have done is to use a lot of their cash to actually do acquisitions of the planes and I have instructed a new restructuring of the balance sheet where you would need to borrow and replace the cash which was being used.
“It’s better to leverage the assets rather than leave it unencumbered but having the company incurring significant debt obligations,” Howai added.
But Opposition legislator Dr. Lester Henry said he was “astounded that the minister could describe as solvent a company which cannot cover its costs and no money in the bank”. (Observer)