Air Jamaica gives CAL 14 days to conclude merger agreement of face legal consequences

The Chairman of Air Jamaica has given Trinidad and Tobago's national carrier, Caribbean Airlines (CAL) two weeks to formalise the Shareholders Agreement between both airlines.

Dennis Lalor wrote to CAL on May 16, two weeks after granting an extension to CAL, pointing out that Air Jamaica and the Jamaican government have made “fruitless” attempts to communicate with CAL and the T&T Government to complete the deal.

Lalor’s letter stated that the Jamaican Government and Air Jamaica “are and have been for a while, ready, willing and able to close the transactions contemplated by the agreement on the terms specified in the agreement.”

It noted that CAL “has been and is obligated to immediately close the transactions contemplated by the agreement on the terms specified in the agreement, adding that CAL's "unwillingness to do so is a violation of the agreement,” and that the violation of the agreement would cause the Jamaican Government and Air Jamaica “significant damages and irreparable harm.”

Lalor’s letter suggested that Air Jamaica could seek damages. That point is also made in a letter from Financial Secretary Wesley Hughes.

"Air Jamaica and the Government of Jamaica now require you to complete the same within 14 days from the date hereof. AND TAKE FURTHER NOTICE that if you fail to complete the same within the aforesaid 14 days, you will be in default of your obligations under the said Agreement and the said Holdings, Air Jamaica and Government of Jamaica will cancel and forego their obligations under the said Agreement and seek such relief as they may be entitled pursuant to the provisions of the Agreement.”

Despite the clear legal threat Lalor told the Guardian Media group in Trinidad no threat is intended. He said he believes the merger of the two airlines woiuld bring immense benefits to the Caribbean.

He said it appears Trinidad and Tobago is not ready to conclude the deal and dismissed suggestyions that CAL would renege on the deal.

The Jamaican Government has selected Lalo to sit on the CAL board as part of the merger agreement, meaning one of CAL's current board members would have to be removed to make way for the Air Jamaica representatives.

CAL acquired Air Jamaica’s routes and aircraft in May 2010. The Jamaican Government absorbed AJ’s US$1.5 billion debt and CAL put forward launch capital of US$50 million. The one-year Shareholders Agreement expired on April 30.