Minister wants report on US$149m in CAL accounts

(Trinidad Express) Transport Minister Devant Maharaj has requested a report from Caribbean Airlines about how US$149 million, which was previously saved in the airline’s bank accounts, was used up.

Maharaj requested the information from new CAL chairman Rabindra Moonan and chief financial officer Robert Corbie yesterday.

His request follows an Express exclusive story yesterday in which former CAL chairman Arthur Lok Jack produced documents showing that when he and his former directors resigned in 2010, CAL had US$149 million (TT$900 million) in cash in the bank and was in a healthy cash position.

The airline has since posted a loss of TT$339 million for 2011.

Maharaj said yesterday he was not in a position to comment directly on the matter because he had not been briefed.

Aviation sources familiar with CAL’s operations have said that the airline used its savings to buy at least two new aircraft and to deal with issues related to the Air Jamaica merger.

Lok Jack told the Express yesterday that after it got off the ground in 2007, Caribbean Airlines continued to increase sales while it simultaneously dropped non-performing routes.

He said that sales turnover at the State airline were at a three-year high in 2009 when they hit the US$280 million mark.

Speaking with the Express, Lok Jack reviewed the airline’s financial statements from 2007 when he chaired the CAL board of directors.

In 2007, the airline’s sales stood at US$176 million, in 2008 they were US$231 million and US$280 million in 2009, CAL figures showed.

Lok Jack said while he was CAL chairman from 2007 to June 2010, the board discontinued non-performing routes like Manchester in the United Kingdom, the Dominican Republic and Washington, DC.

“We focused on profitable routes like Miami, New York, Caracas and Toronto and we developed them. We used similar strategies by making routes nonstop and offering frequency of service, like New York four times a day. We also concentrated on the diaspora and ensured there was 100 per cent reliability of flights,” Lok Jack said.

As a result, other airlines and charter services all came off the market because “we offered such a good product”, he added.

During his tenure, Lok Jack said CAL did a robust analysis and closed out short routes to make others nonstop services.

After they resigned in 2010, Lok Jack said he and his directors (Gervase Warner, Shafeek Sultan-Khan, Robert Riley and William Lucie-Smith) were “totally aghast” at some of the decisions which took place at CAL with regard to the route structure.

He said he and the other former directors were aware that some of the routes CAL took on were not cheap and would “burn cash”.

“We had taken off all the unprofitable routes,” Lok Jack said.

These included some which were proposed before the Air Jamaica merger was completed.

In recent months CAL has introduced services to Grenada and St Lucia.

Neither one has pulled in revenue or filled aircraft seats.

It also plans to introduce a London Gatwick service next month.

 

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