Air Jamaica must go, give us the full details on sale Published: Wednesday | March 10, 2010
This newspaper has for a long time backed the move by the Golding administration to relieve Jamaican taxpayers of the burden of the losses generated by Air Jamaica, the state-owned airline.
Indeed, as Prime Minister Bruce Golding remarked recently, the more than US$1.3-billion deficit accumulated by Air Jamaica during its lifetime - over half of which came when it was under private control - could have fixed many schools and hospitals, thus helping to improve the quality of education and health in the country.
But we are where we are. And that is a place, we believe, of consensus that the state can no longer afford to annually shell out around US$130 million, or over J$11 billion, a year to keep the business afloat. That is perhaps the equivalent to the loss of all other state companies combined.
The move to divest Air Jamaica obviously makes sense. We are concerned, however, that the administration's clumsy handling of the effort is breeding not only uncertainty, but deepening opposition to a deal involving Caribbean Airlines, the carrier owned by the Trinidad and Tobago government. No one is clear, precisely, what is happening.
Lack of clarity worrying
This lack of clarity and transparency is particularly worrying for the Government is well aware of Air Jamaica's iconic status in Jamaica and the sensitivities that were always likely to be aroused by its transference to foreign hands.
Discerning people were, of course, always aware that a straightforward sale of Air Jamaica was unlikely - certainly not in this difficult global economic environment, which is especially bad for the airline industry. No one was about to embrace the company's huge debts. These would have to become a direct liability of the Jamaican state. The Government should have made this pellucid from the start.
Despite public sentiments in favour of the pilot-led employee group that belatedly put in a bid for the carrier, the Government was clearly right not to end negotiations with Caribbean Airlines to accommodate their offer. Not only would this have been a breach of procedure but, as Mr Golding said, they needed to demonstrate that they had the equity finance to run the business. They have not done this to the satisfaction of the Government.
Approach to deal wanting
Yet, the Government's approach to the deal with Caribbean Airlines, at least how it manages information, has been wanting. What it communicated to the public was too murky, when it should have been full and precise that this was not a conventional acquisition of the assets and liabilities of one company by another.
Then there was the public controversy over whether Caribbean Airlines would be designated exclusive national carrier for Jamaica, as was contained in an original letter of intent from which, according to Mike Henry, the administration has now retreated.
Additionally, there is the confusion over when Caribbean Airlines will actually assume its short-term 'management' of the old Air Jamaica, and whether what it is buying are Air Jamaica's profitable routes which, on the face of it, makes economic sense.
It is important for Prime Minister Golding to urgently lay out the facts of the deal, as well as outline Air Jamaica's most recent account, so that people are aware of the issues at hand. The confusing dribble of information is causing more harm than good.
Zacca to head divestment of Norman Manley Airport team
BY AL EDWARDS
Wednesday, March 10, 2010
SPECIAL Adviser to the prime minister Christopher Zacca has been appointed by the Government to chair a committee responsible for the divestment of the Norman Manley International Airport (NMIA).
Minister of Information Daryl Vaz made the announcement at a specially convened meeting at Vale Royale last week for media owners and practitioners. At the end of last year, Prime Minister Bruce Golding announced: "We have taken a decision at Cabinet to appoint a team to pursue the privatisation of the Norman Manley International Airport. The method that was used for the Sangster International Airport was a good method and we intend to pursue that."
Norman Manley International Airport Norman Manley International Airport 1/1
Zacca began his role as Special Adviser to the prime minister in October 2009. Part of his responsibilities includes the provision of analytical support and co-ordination of major projects, proposals and development strategies working in collaboration with the relevant government agencies.
Speaking with Business Observer from Kingston, Zacca said: "The Cabinet has appointed a special enterprise team which will oversee the divestment of NMIA of which I will serve as chairman. It will be based at the Development Bank of Jamaica (DBJ) and will hold its first meeting in two weeks time."
The team comprises: Dennis Morgan, a representative of the Airports Authority; the president of Jampro, Sancia Bennett-Templer (who played an instrumental role in the divestment of Sangster International Airport in Montego Bay); a representative from the Solicitor General's Department; Chairman of the DBJ, Joseph M Matalon; a representative of the Ministry of Transport with William Shagoury serving as deputy chairman.
Zacca brings a wealth of experience to this new position, serving as a former CEO of Air Jamaica, past president of the Private Sector Organisation of Jamaica and deputy chairman of the Appliance Traders Limited Group of Companies.
He noted that the NMIA had made a marked improvement and the aim is to transform it to a more efficient operation that generates revenues.
"The brief we have been given is to divest NMIA as soon as possible," said Zacca.
Business Observer has learnt that a number of airport operators have already expressed an interest, including one from South America.
A contract relating to the upgrade of NMIA which forms part of a masterplan to increase its capacity to cater for projected air and passenger traffic at an acceptable level of service to the year 2023, went to Keir Construction and is valued at US$161.5 million. The project will be implemented in three phases (1A, 1B and 2).
3/10/2010 I am happy that NMIA will not be sold and instead the JLP will follow the lead of the PNP by focusing on a long-term operational lease that removes the burden of managing the airport while still retaining ownership (yes, the PNP actually did some things right). Many municipalities in the USA are looking at the same options for highways, airports and other entities so it is wise of the PM to make this move. I just hope that more of the state entities will get the same treatment instead of being sold off for a one-time gain. Long-term leases are the smart way to go, especially in a recession. The Port of Kingston is a natural one to be leased, not sold.
James Ozermann 3/10/2010 My question is this...when we have independence day whether this year or in ten years from now, whose flag are we going to raise?
Christopher Peart 3/10/2010 I cannot believe what I'm reading about Jamaica outsourcing NMIA to a South American country. Now when NMIA get outsource all the money will leave the country and make the island more in debt, because people are going to get undermined. I think we need to bring in fresh minded people back to Jamaica to run entire thing, because our current government is bunch of ass holes that only looking out for themselves and friends. What IMF say we need to divested our Air port too. All we have in government is all sellouts.
Hope Alive 3/10/2010 Is the airport a loss making entity?
3/10/2010 Is there anything that is going to be left for posterity? Where is the vision? Why isnt the USA divesting all their assets? Why do poor countries sell everything they have? The answer: poor leadership dressed in jacket and tie exuberating their verbosities thinking we dont understand what they saying or doing.
JA Cynic 3/10/2010 The Chinese should be the front runners: they are fixing the strip from Harbour View round-a-bout; interested in the Kingston wharves; financially assisting in the building of our foreign affairs HQ on the waterfront; eyeing the Chinatown concept for Kingston etc. etc. Mr Zacca would do well in getting Rosetta Stone in Mandurin to ensure that he is up to the task. JA Cynic
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Originally Posted By: truetrini
Originally Posted By: Jagga
Better be nice to our Trini friends on the site as Trinidad is slowly taking over Jamaica
I hope Metro taking note of this.
triniman mi just come back from Bahamas using american airlines , I have nothin to do with Air Caribbean and I will continue to spread my message , trini people are too bad minded .
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put me on your buddy list I will be more than happy to do the same .
Nothing yet reddevil elections called in T&T Government looks like they may fall to the opposition, all takeover talks on hold til the end of the month!
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Education is a progressive discovery of our own ignorance.
Govt completes $300m Air Jamaica deal Aretha Welch awelch@trinidadexpress.com Thursday, April 29th 2010
The deal to bring together two of the region’s leading airlines is done.
It will cost an estimated $300 million (US$50 million) for national carrier Caribbean Airlines to acquire and operate six Air Jamaica aircraft and eight of its routes.
Air Jamaica, also, will retain 1,000 of its 1,800 employees, who will run its operations that were acquired by Caribbean Airlines in the deal.
Details were disclosed at a news briefing by Caribbean Airlines chairman Arthur Lok Jack at the Carlton Savannah hotel, Cascade, yesterday.
He said: ’We are taking over the routes from the first of May, that is Saturday coming.’
done deal: Caribbean Airlines chairman Arthur Lok Jack answers questions about the national carrier and Air Jamaica during a briefing at the Carlton Savannah hotel, Cascade, yesterday. -Photo: Jermaine Cruickshank
Lok Jack said the US$50 million which has been approved by Cabinet will be used as operating capital and expenditure.
Lok Jack said the deal was completed yesterday.
The negotiations started with a letter of intent of January 22.
The government of Jamaica will now own a 16 per cent share in Caribbean Airlines.
The Government of Trinidad and Tobago will retain an 84 per cent shareholding.
The eight routes which Caribbean Airlines will now operate with the Air Jamaica fleet are Kingston to Ft Lauderdale, Kingston to New York, Kingston to Toronto, Montego Bay to Fort Lauderdale, Montego Bay to New York, Montego Bay to Philadelphia, Kingston to Grand Cayman and Kingston to Nassau.
CAL executives said there would be an estimated ten weekly flights between Jamaica, North America, the Caymans and The Bahamas.
Lok Jack confirmed about 800 employees were laid off at Air Jamaica when the acquisition was finalised. Approximately 1,000 employees, including flight attendants, engineers and pilots, have been retained.
He said pension costs and separation packages for employees will be handled by the Jamaican government.
Lok Jack also said the Jamaican government was continuing talks with Air Jamaica employees and their unions.
All Air Jamaica’s debt and closure costs-an estimated US$800 million- will be kept, also, by the Jamaican government.
Lok Jack said CAL executives expect to see a return on the country’s investment by next year.
Caribbean Airlines will also take up Air Jamaica’s frequent flyer programme and will honour all Air Jamaica tickets.
Air Jamaica’s fleet will also retain its name and logo until Caribbean Airlines finalises either the purchase of leasing of a new fleet from either Airbus or Boeing later this year.
Lok Jack anticipates the transition should take about three to six months, but said Air Jamaica tickets will continue to be sold, and people who board Air Jamaica flights will continue to be greeted by Air Jamaica’s crew. Lok Jack said Caribbean Airlines would benefit from taking up Air Jamaica’s routes, and CAL’s team saw it as an opportunity to increase airline revenue by two-thirds almost immediately.
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Education is a progressive discovery of our own ignorance.
So Govt of Jamaica earns $50M but still must absorb $800M in debts and costs? I am one who believes the very limited public funds shouldn't be spent on keeping Air J alive but it still hardly seems as though the Govt of Jamaica is getting out of jail with this sale.
Anyway, one for the T&T "taking over" of Jamaica:
A Trinidadian is in Jamaica on business. He says "man I came here looking forward to trying a Jamaican rum, but I left disappointed cuz all dey give me was Appleton!"
Sad and funny at the same time.
