CAL looking to shrug off Govt fuel subsidy

(Trinidad Express) Caribbean Airlines (CAL) is expected to begin phasing out its expensive fuel subsidy in a bid to become self-reliant.

The Sunday Express understands that at the start of the next fiscal year, the company will begin the process with the hope of weaning off Government’s subsidised fuel help over the next three years.

“This would inform how the company does its budget in the coming year. The company wants to move away from that reliance,” a source close to the process told the Sunday Express yesterday.

Asked if that could mean higher ticket prices or reduced routes, the source explained that ticket prices were expected to be stable and routes will be rationalised.

“The intent with CAL at this point is not to be profitable but to break even and become fairly sustainable moving forward,” the source said.

CAL’s subsidy has been criticised by regional carrier LIAT which argued recently that the subsidy has given the national airline an unfair advantage in the regional travel market.

LIAT was hoping to secure the same subsidy for its ATR aircraft but the suggestion was dismissed by Finance Minister Larry Howai.

CAL’s  subsidy also extends to its Air Jamaica (AJ) aircraft.

The subsidy, which is estimated at over $300 million, is part of Government’s expensive fuel subsidy bill.

It was granted for a three-year period at a fixed price—US$50 a barrel of oil—when CAL was formed in 2007.

It was subsequently extended but the pricing changed. It moved from US$1.50 to US$2.34 a gallon.

On May 4, 2012 former finance minister Winston Dookeran disclosed to Parliament that the airline made an unaudited loss of US$52.8 million (TT$339.5 million) for 2011 while Air Jamaica recorded an unaudited loss of US$38.1 million (TT$245.2 million) for 2011.

CAL is expected to file its financial statements for 2011 and 2012 in Parliament soon.

The company has been challenged with financial debt, had issues with corporate governance and had its board fired by Howai.

It has had to write off some TT$200 million in cargo losses and alleged credit card fraud.

Former acting chief executive Robert Corbie resigned from the company last month and the airline is searching for a replacement.


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