(Jamaica Observer) Air Jamaica’s J$131-billion mountain of debt is not to blame for Caribbean Airlines’ (CAL’s) current troubles. The divestment team that organised the Jamaican Government’s sale in 2010 rejected recent reports that the airline was an albatross around the neck of its Trinidadian rescuer.
CAL did not get any assets or liabilities of Air Jamaica when it started operating the national airline in May 2010, said the head of the divestment team, Dennis Lalor. Nor were Air Jamaica’s operations merged with CAL’s even when it began operating under the Caribbean Airline’s brand a year later.
This contradicts news reports in regional media that said some of Air Jamaica’s debt burden, put at US$1.5 billion ($131 billion) by former Finance Minister Audley Shaw in a statement to Parliament last year, was passed on to CAL when the airline was bought out.
“The Government of Jamaica assumed all liabilities of Air J, providing CAL a clean slate as it relates to Air J’s operations,” Lalor said, adding that this was done to ensure that CAL would have no disadvantages when it got the Air Jamaica brand.
“In addition, the Government of Jamaica provided CAL with cash of over US$17 million, which represented tickets prepaid for by customers not yet flown.”
CAL took over Air Jamaica routes that it continued to operate under that brand and for which “CAL has the exclusive right to use in exchange for maintaining certain minimum service levels”.
Jamaica’s role was to make it easier for CAL to operate as its national airline by supporting a waiver that allowed Air J to continue flying to North American markets, Lalor said. These include routes to Fort Lauderdale, New York and Toronto.
The agreement between CAL and Air Jamaica, which left the Jamaican Government with a 16 per cent stake, was finalised a year ago.
The Government’s involvement with Air Jamaica is limited to the appointment of one director, currently Lalor, who represents the country’s minority share.
The divestment team believes that a regional airline can be viable, Lalor said, and hopes that CAL’s reported losses will soon end.
