(Trinidad Express) Bankruptcy is not an option for debt-riddled State-owned Caribbean Airlines Ltd (CAL), Finance Minister Larry Howai said yesterday.
Speaking to reporters following the annual general meeting of the Trinidad and Tobago Manufacturers Association (TTMA) at the Hyatt Regency (Trinidad) in Port of Spain yesterday, Howai said the company would now have to restructure its entire finance structure.
“We have to consider going forward when we restructure the overall balance sheet to facilitate the ability of CAL to meet payments and meet commitments out of existing cash flows. I can’t say if it will require cutting down on staff. We need to be careful that we do the restructuring in such a way that we can run the airline in a sustainable way. Everything will be up for review—including the board, not just the balance sheet,” Howai said.
CAL’s predecessor BWIA also suffered from severe debt issues and was dissolved in 2007, giving way to CAL as the new national airline.
A Sunday Express investigative report said the company faces a TT$1.4 billion debt.
“TT$1.4 billion in deficit is a significant amount of money when one looks at the time frame it was accumulated, so we need to take some drastic action. This is an urgent matter,” Minister in the Finance Ministry Vasant Bharath, said yesterday, also at the Hyatt. Bharath holds the portfolio of Corporation Sole within the Finance Ministry, and therefore also oversees operations of CAL.
Bharath will be acting for Howai for the rest of the week, while Howai is in Washington DC.
“CAL is operating in a very competitive industry worldwide on very small margins. What has happened (based on the report yesterday) is they are in a deficit position and there have been losses attributed to (the acquisition of) Air Jamaica. I’ve not had an opportunity to review anything since reading the report nor have I seen the 2012 audited statements, but I intend to speak with (CAL chairman Rabindra Moonan and CEO Robert Corbie) this week to get a clearer picture,” he said.
He said the company’s board intends to bring in international experts to advise on the best way forward.
“We must have a national airline. We believe that it is important for the diaspora and the tourism sector and we now have to make sure it is run profitably and efficiently,” he said.
He said the point will be to determine how to run the airline so it is not a drain on the Treasury.
“CAL has to understand what its unique selling points are,” he said.
Former CAL chairman Arthur Lok Jack said those selling points were simple: give service and remain profitable.
“If the agenda is focused to make profit and giving security to the country and main diaspora routes it can be profitable. I think CAL has to go back to basics and focus on its main routes and maximise them,” Lok Jack said yesterday at the Hyatt.
Lok Jack was chairman of CAL’s board from inception in 2007 until 2010, when he resigned after a change in government.
“(We left) the airline in a very healthy state: the positive balance sheet, no debt, no intention to take on debt. However the airline industry is very volatile and runs really on very heavy cash flows so it very easy to burn cash. We left them with dominant market shares in NY and Toronto, and sharing Miami with American Airlines. On that basis CAL could have made money. We were also developing Suriname and Guyana as a domestic market,” he said.
He said the Air Jamaica acquisition and the intent to purchase new aircraft from a French firm were good business plans, but how they were handled after the board he led demitted office was “not properly done”.