(Trinidad Guardian) – By August this year, Caribbean Airlines (CAL) had posted US$16.5 million in profits. Its fuel bill at that time was approximately US$56.9 million and total operating expense, which covered employee costs, lease of aircraft, maintenance, passenger expenses, marketing, commissions and inclusive of fuel, was US$316.7 million.
This data was provided in condensed financial reports submitted by acting chief executive Robert Corbie to Transport Minister Devant Maharaj on October 5. The financial reports, which spanned 2008-August 2011, went to Cabinet on October 13.
The reports reveal that:
• CAL was given US$139.2 million to start up by the PNM Government in the period 2006-2007.
• In 2009, CAL’s profit was US$2.6 million.
• In 2010, the company posted a loss of US$17.6 million. Its total revenue was US$378 million, its operating expenditure was US$390 million, inclusive of a fuel bill of US$73.7 million.
• By August 2011, total revenue was US$332 million with profits for that time at US$16.5 million.
• Employee costs declined from US$64 million in 2010 to $45.6 million by August 2011. CAL had cut several hundred jobs after the acquisition of Air Jamaica in June 2011.
The T&T Guardian was told that CAL expected to achieve the same level of profitability for the upcoming Christmas season as it did for the July-August holidays. The airline also expects to receive a cheque from the Ministry of Finance to cover its fuel hedge which remains in place until December. CAL’s fuel hedge, up to May 2010, was US$50—in effect a fixed price for aviation fuel. If oil prices exceed US$50, the government will cover the difference. Post-May 2010, the government agreed that the hedge price of US$1.75 a gallon be changed to US$1.50 a gallon. The hedge has cost the government hundreds of millions in the past few years.
The financial reports were used by Maharaj as a basis to advance CAL’s chairman George Nicholas’ desire to purchase two additional B737s, during the Cabinet meeting. The T&T Guardian, however, was told that Maharaj encountered opposition in Cabinet for the proposal. In a letter to the Civil Aviation Authority (CAA) on the airline’s expansion plans, Corbie explained: “Subsequent to the incident involving BW523 on July 30, 2011, it means that Caribbean Airlines will be short one aircraft for its fleet. “As a result, the plan is to add two more B737-800s,” he said. “We have also taken into account that for every month of the year in 2012, Caribbean Airlines will have an aircraft out of service. “This is due to the fact that one aircraft from the fleet will be taken in for thorough C-check maintenance every month as we comply with the regulatory standards of maintenance.”
However, to date CAL has only obtained one aircraft. The T&T Guardian understands that failure to get government approval resulted in Air Lease Corporation releasing an aircraft earmarked for CAL to another interested party. Nicholas is optimistic about acquiring two B767s from Chile next year to operate London and New York or New York and Toronto. Reports are that CAL has already submitted a letter of interest and paid a US$1 million deposit. And while the airline awaits a final report from the Guyanese Civil Aviation Authority on the cause of the runway excursion, CAL has received about 140 legal letters from some of the 157 passengers who were on the flight. The licences of both pilots—Fareed Dean and first officer Jason Naipaul— remain suspended after the incident, but they are still employed at CAL.
The report on CAL titled Financial Outlook 2011-2012 states: “The financial outlook of the airline is a challenging one and one that must be carefully navigated. “With fluctuations in the price of crude oil being one of the destabilising factors for airlines, it is imperative that CAL positions itself strategically to benefit from the available facilities to mitigate against drastic increases in the cost of jet fuel.”
