(Trinidad Express) The Ministry of Finance has requested that State carrier Caribbean Airlines submit its latest financial statements following CAL chairman George Nicholas’ recent announcement that the airline made a TT$200 million profit.
Sources familiar with the airline’s performance say that the “profit” does not factor in a TT$279 million fuel hedge, which would actually show that CAL has lost almost TT$300 million this year even with full flights to most of its destinations.
Finance Minister Winston Dookeran yesterday confirmed that a request was issued for all updated financial documents from CAL just days after CAL chairman George Nicholas publicly announced the multi-million dollar net profit.
Dookeran yesterday confirmed that he requested CAL submitted its financial statements “as soon as they are ready”.
In a brief telephone interview yesterday, he said it was normal practice for the financials of all State-owned companies to submit its documents, but CAL has not submitted any financials for the past three years.
The questions arose within financial circles last week when, at a welcome event for CAL’s new ATR 600 planes, Nicholas announced a TT$200 million profit for the usually cash-strapped and heavily subsidised local carrier. Finance sources said Nicholas failed to factor in the approximately TT$279 million jet fuel subsidy paid by the government as part of its fuel hedge agreement.
Last week, Nicholas boasted that the company was putting “millions into the Treasury”, but in a brief telephone interview on Friday, Nicholas said he “would have to check” to verify if a repayment of the multi-million dollar subsidy was included in the accounting.
“I did say we expected to close the year with a TT$200 million net profit. That net profit was according to normal accounting standards,” Nicholas said.
He did not say if it included the fuel subsidy.
At present CAL enjoys a fuel hedge, which protects the company from rising fuel costs by initially establishing an agreed fixed price. While the usual cost of jet fuel ranges at US$3.85 per mile, CAL, through the Government subsidy, pays approximately US$1.50.
Nicholas did raise the issue of the fuel hedge at the same welcome for the new plane.
“We know that our regional neighbours pay for flights to and from their country and also give our competitors subsidies, in addition to fuel hedges which amount to much more than the fuel subsidy which we receive,” he said last week.
“As to our subsidy there are some months when we have used it and other months when we have repaid it several times over. It is similar to an overdraft facility. The profits stay with our respective treasuries,” he said.
Nicholas was also proud that CAL was able to purchase the first ATR plane from “our internal cash flow”.
A Government source said though CAL did pay for the planes, it was the government that acted as the guarantor for the purchases.
Dookeran said he could not comment on the state of CAL until he had the financial documents in front of him. Transport Minister Devant Maharaj did not return calls to his mobile phone.