(Trinidad Express) After five years of business and in the face of mounting debt, national carrier Caribbean Airlines (CAL) faces “operational risk”.
And government will have to intervene financially in the cash-strapped airline to keep it flying.
Finance Minister Winston Dookeran told the Sunday Express that his ministry has asked the State airline for a list of its financial requirements and a business plan for the future.
This, Dookeran confirmed on Saturday, will inform the amount and type of intervention which the government will pursue for CAL.
CAL’s outstanding liabilities, the Sunday Express learnt, currently stand at an estimated US$40 million exclusive of US$100 million owed to France’s Aviones de Transport Regional (ATR).
Significant liabilities are due to the airline’s major suppliers include:
• US$5 million in taxes owed to the United States Internal Revenue Service (IRS) for a penalty charged to the airline
• US$3 million owed to the US for Customs and Border Taxes
• US$3.5 million owned to National Petroleum for fuel which could cause disruptions to operations,
• US$2 million owed to Strategic Air Services (which handles cargo for CAL)
• US$2 million owed to Swissport for Passenger Handling
• US$3 million for the Comptroller of Customs for Passenger Taxes
Other debts include money owed to the Airports Authority of Trinidad and Tobago, Ross Advertising and Synergy Aviation which supplies aircraft parts for the airline.
On May 4, Dookeran disclosed to Parliament that the airline made an unaudited loss of US$52.8 million ($339.5 million) for 2011 while Air Jamaica recorded an unaudited loss of US$38.1 million ($245.2 million) for 2011.
Dookeran’s own ministry has been criticised by CAL sources for being tight-fisted with releasing funds owed to the airline (as a result of a fuel subsidy rebate) which exacerbated the airline’s financial woes.
The majority of CAL’s debt is centered around two investments- the decision to acquire nine aircraft from ATR and the airline’s Air Jamaica commitments.
The Sunday Express learnt that while cabinet gave approval on September 9, 2010, from a note submitted by then line minister Works and Transport Minister Jack Warner, for CAL to enter into a purchase agreement with ATR for nine aircraft, that no funding requirements were identified for the acquisition.
CAL paid the US$1.8 million commitment fee-calculated to a TT$200,000 deposit on each aircraft- out of pocket on September 13.
By January 2011, the Sunday Express learnt, CAL management had approached the Ministry of Finance for money for the ATR purchase but was told that no funding had been requested on the cabinet note.
Subsequently, CAL was forced to utilise its own internal funding to pay fully for the first two aircraft.
To date, CAL has paid US$77 million to ATR.
However, CAL now faces a default risk, as well as penalities and interest, on that Heads of Agreement signed with ATR on September 13, 2010.
The Sunday Express learnt that an ATR representative had sought a meeting with the Ministry of Finance to consider how the seven outstanding aircraft will be financed. ATR began handing over aircraft to CAL in November 2011 with the expectation that one would be delivered every month thereafter. However, at least four aircraft remain unpaid and uncollected on their hands.
Transport Minister Devant Maharaj told the Sunday Express that he was considering financing arrangements for the airline to acquire the aircraft.
The other half of CAL’s financial burden is its commitment to Air Jamaica.
