Despite its pledge not to pump money into the Air Jamaica deal, The Trinidad and Tobago Government is now saying it will invest US$50 million (TT$315 million) in Caribbean Airlines Ltd (CAL) to meet "operating and capital expenditure" when it takes over Air Jamaica's "profitable" routes on May 1.CAL chairman Arthur Lok Jack made the announcement Wednesday at a news conference in Port of Spain.
CAL has been discussing the business arrangement with a team from the International Monetary Fund (IMF), which is assisting with the airline's divestment.
The IMF is bothered by the huge debts of Air Jamaica and is reluctant to lend money to help in the business arrangement.
According to Lok Jack, the investment would give CAL 84 per cent ownership of the airline with the Jamaican government keeping the other 16 per cent.
Kingston is spending about US$200 million to meet Air Jamaica’s outstanding obligations during the transitional period, according to the Jamaica Information Service.
"The way we have worked it out, we expect that we would get a fairly good return on that money coming into 2011. What we expect and looking at it conservatively is US$12 million to US$15 million per year," Lok Jack told reporters.
Lok Jack said Bruce Nobles, Air Jamaica’s chief executive officer and president, would stay on until the transition is finalised. He explained that CAL will keep the 1,000 employees who stayed with Air Jamaica while the others would get separation packages funded by the Jamaican government.
Lok Jack said he expects to see growth in the airline’s performance once the transaction is completed.
He said CAL is getting an opportunity to increase revenue by almost two-thirds overnight with a fully developed business.
Lok Jack added, "So we are not taking on any costs at all and what we have happening here is that we are getting a clean operation with routes that we want, not routes that we don’t want...
“We found them (routes) to be very good routes with good load factors, they were developed routes with a number of people flying and the revenue at hand was quite substantial for those routes".
He said there are "no skeletons in the closets" and as a result CAL will now move from owning nine aircraft to approximately 15.
Works Minister Com Imbert said last month that Caribbean CAL will not be merging with or taking over debt-ridden Air Jamaica.
Imbert said Air Jamaica will be shut down and CAL will take over its profitable routes to ensure Jamaica maintains its "tourism lifeline" with its major markets in North America and Europe.
However he insisted that Government is not taking over any of Air Jamaica’s debts, which is estimated at over TT$12 billion.
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