Doubts expressed over CAL's $200M profit; subsidy may have been left out

The Express newspaper reported on Sunday that Caribbean Airlines (CAL) may have actually suffered a loss of nearly $300 million instead of the $200 million profit reported by its chairman, George Nicholas III.

The paper said the profit reported did not factor in the fuel hedge of $279 million, citing sources in the ministry of finance. It stated that the ministry has ask CAL to submit its latest financial statements.

The paper stated that Finance Minister Winston Dookeran confirmed that his ministry made a request for all updated financial documents from CAL just days after Nicholas publicly announced the multi-million dollar net profit.

The Express said Dookeran also confirmed that he asked CAL to submit its financial statements "as soon as they are ready".

However Dookeran explained that it is normal practice for all state companies to submit their financial accounts. In CAL's case, it has not submitted accounts since it began its operations three years ago.

Nicholas made the announcement of a $200 million profit when he welcomed the airline's first new ATR-600 plane. CAL is buying nine new aircraft to replace its existing short-haul fleet.

The Express said while Nicholas boasted of putting "millions into the Treasury" he admitted that he would "have to check" to verify if the subsidy was considered when he announced the profit.

CAL enjoys a fuel hedge, which protects the company from rising fuel costs by establishing an agreed fixed price. Jet fuel costs about US$3.85 per mile. However, CAL pays about US$1.50 per mile because of the subsidy it gets from the government.

Last week Nicholas noted that other airlines also benefit from a fuel subsidy. "We know that our regional neighbours pay for flights to and from their country and also give our competitors subsidies, in addition to fuel hedges which amount to much more than the fuel subsidy which we receive."

"As to our subsidy there are some months when we have used it and other months when we have repaid it several times over. It is similar to an overdraft facility. The profits stay with our respective treasuries," he said.

The Express said Dookeran stated that he could not comment on the financial state of CAL because he had not examined the relevant documents.