The T&T Government plans to invest US$50 million into Caribbean Airlines Ltd (CAL) so that its operating and capital expenditure can be met on May 1 when CAL takes over the "profit-making" routes which were serviced by Air Jamaica. So said Arthur Lok Jack, chairman, CAL, at a news conference at the Carlton Savannah hotel, St Ann's, yesterday. CAL has been in talks with a divestment team from the International Monetary Fund (IMF), which was appointed to look after Air Jamaica's affairs after that airline's debts mounted to levels at which IMF no longer wanted to lend it more money.
When the transition takes place, T&T's CAL would have 84 per cent ownership and the Jamaican government 16 per cent. The Jamaican government is spending an estimated 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 said.
Expanding on the management structure of the merged airlines, Lok Jack said Bruce Nobles, Air Jamaica's chief executive officer and president, would stay on until the transition is finalised. Lok Jack said CAL plans to keep the 1,000 employees who stayed with Air Jamaica while the others would be given voluntary separation of employment packages (VSEP), which would be paid by the Jamaican government. "After going through the human resource management of the company, we chose people who seemed to be good workers. The people who had not good records and so on were the ones who were retrenched and those were the ones who had redundancy payments funded by the government of Jamaica," Lok Jack said.
He said once the transition is complete, growth in the airline's performance is expected. "It's not very often that one gets an opportunity to increase one's revenue by almost two-thirds overnight with fully developed business–paying a price for that without having legacy costs or skeletons in the closet that you don't know you would find later. This is a clean operation which we are taking over," Lok Jack said.