(Trinidad Express) Finance Minister Larry Howai has sent the Caribbean Airlines board of directors back to the drawing board to tweak some of their propositions on how to restructure the debt-riddled State enterprise and make it commercially viable.
“In the proposal they gave me I thought there were further changes, for example, there were some routes that were kept, (because the board assumed) I would want to keep them. The point is I want them to be commercially viable, so if they can take out these routes and (we can) see what the implications are from an economic and commercial perspective,” he said.
Howai told the Express in an interview at his Port of Spain office on Tuesday that the point was to minimise any disruption for the airline, including avoiding having to make staff cuts. He said he had instructed the board to make the further changes, and he was expecting the revisions in a few weeks, and after that, he could take them to Cabinet for final approvals.
In September, in keeping with a promise he made in his 2014 budget presentation, Howai received the restructuring report for the airline from interim chairman Phillip Marshal.
So far, Howai said, the company’s cash flow was looking reasonably good, and during the peak summer months, the airline had even turned a profit.
“Their cash position is good, with about US$20 million in the bank, so it’s not an immediate crisis situation as far as the company was concerned, but a question of how we move forward and maintain this position during this (off-peak) part of the year when the profits reverse before it picks back up in December,” he said.
The company still has debt though—with the last figure he had on hand being $650 million.
“This will need to be restructured because it was all going to be a bullet payment in early next year—no company has TT$650 million to pay off a loan in one shot just like that. What (the board) did in their first iteration of the strategic plan was to put forward some proposals on how to restructuring that debt over time. The company has sufficient assets to allow them to meet obligations to act as collateral and provide cash flow to meet obligations on an ongoing basis if they are managed well, based on the preliminary data that I saw,” he said.
He said the revisions from the board should include strategies that will reflect a position for Caribbean Airlines to adequately collateralise its assets and loans and be in a position where the government does not have to pay those loans.
“But what I will have to recapitalise the company, because some of their brought forward loans will have reduced their overall capital. But I budgeted TT$400 million for that this year; with that capital they should be able to restructure the balance sheet,” he said.