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Caribbean Airlines recorded losses of $70 million in 2012 – Minister Howai
The Trinidad & Tobago based and state-owned Caribbean Airlines recorded losses estimated at US$70 million last year, the twin island-nation’s Finance Minister Larry Howai has revealed.
He told the Senate on Tuesday that the figure does not include the US$40 million in fuel subsidy to the airline even though he insists that the airline remains solvent.
“Government has made certain provisions for the airline to restructure its balance sheet. One of the things they have done is to use a lot of their cash to actually do acquisitions of the planes and I have instructed a new restructuring of the balance sheet where you would need to borrow and replace the cash which was being used.
“It’s better to leverage the assets rather than leave it unencumbered but having the company incurring significant debt obligations,” Howai added.
Howai said the preliminary unaudited figures showed US$32 million of the US$70 million loss was incurred by the Air Jamaica route, with the London route also accounting for a major part of the losses.
Caribbean Airlines, which began operations in 2007, acquired Air Jamaica in 2011. The Jamaican Government has a 16 percent stake in the Trinidad & Tobago based carrier.
The carrier has reduced the number of flights to Jamaica and on the London route, it has terminated the wet-leasing arrangement – which, Minister Howai said, would significantly reduce the losses of the airline in 2013.
Howai said the US$40 million fuel subsidy applies to Air Jamaica and the Caribbean Airlines. He said it was the same as last year and would end in 2015.
The carrier has provided the government of Trinidad & Tobago a restructuring plan to deal with the losses. The plan includes reducing on the number of flights to Jamaica.
The Jamaican government has indicated concern with the reduction of flights, and the administration in Trinidad & Tobago has undertaken to send a high level team to Jamaica to resolve what could potentially become a big trade dispute between the two largest economies in the Caribbean Community.
Source: CMC