Ma­jor­i­ty state-owned Caribbean Air­lines Ltd (CAL) is poised to sig­nif­i­cant­ly re­duce its debt ser­vic­ing costs re­lat­ed to in­ter­est on lo­cal loans be­tween the 2024 fi­nan­cial year and the cur­rent 2026 fi­nan­cial year, sig­nalling a strate­gic shift to­ward greater fi­nan­cial sus­tain­abil­i­ty.

Ac­cord­ing to the Draft Es­ti­mates of Re­cur­rent Ex­pen­di­ture 2026 doc­u­ment, CAL’s ac­tu­al ex­pen­di­ture on in­ter­est pay­ments for lo­cal loans in 2024 amount­ed to $113.81 mil­lion. Re­vised es­ti­mates for 2025 show a pro­ject­ed de­crease to $102.84 mil­lion fol­lowed by a sub­stan­tial pro­ject­ed drop to $71.96 mil­lion in 2026. That is a 36.77 per cent de­cline be­tween the ac­tu­al ex­pen­di­ture on lo­cal in­ter­est in 2024 and the pro­ject­ed ex­pen­di­ture in 2026.

This down­ward tra­jec­to­ry in its in­ter­est pay­ment re­flects the Gov­ern­ment’s ef­forts to re­struc­ture the air­line’s debt load, pos­si­bly through ear­ly re­pay­ments, re­fi­nanc­ing arrange­ments or im­proved loan terms. The an­tic­i­pat­ed sav­ings could bol­ster CAL’s liq­uid­i­ty po­si­tion and free up re­sources for op­er­a­tional im­prove­ments and strate­gic in­vest­ments.

The re­duc­tion in in­ter­est pay­ments comes at a time when CAL is nav­i­gat­ing in­creased op­er­at­ing costs, in­clud­ing main­te­nance, han­dling, and se­cu­ri­ty. Nonethe­less, the pro­ject­ed eas­ing of its debt in­ter­est oblig­a­tions sug­gests a more sta­ble fi­nan­cial out­look for the na­tion­al car­ri­er as it con­tin­ues to re­cov­er and repo­si­tion it­self in the re­gion­al avi­a­tion mar­ket.

The Draft Es­ti­mates of Re­cur­rent Ex­pen­di­ture for 2026 al­so in­di­cate a sharp in­crease in CAL’s prin­ci­pal re­pay­ments on its lo­cal loans. The ac­tu­al prin­ci­pal loan re­pay­ment in 2024 was $172.71 mil­lion. The pro­ject­ed prin­ci­pal re­pay­ment by the Gov­ern­ment of CAL lo­cal debt is ex­pect­ed to jump to $626.84 mil­lion in 2026. This sug­gests a more than tripling of the air­line’s prin­ci­pal re­pay­ment be­tween 2024 and 2026.

The sharp in­crease sug­gests a de­lib­er­ate move to re­duce the air­line’s long-term debt bur­den, even as short-term ex­pens­es con­tin­ue to climb.

While this move could ease fu­ture in­ter­est bur­dens, it al­so rais­es ques­tions about how such a large out­lay might im­pact oth­er ar­eas of pub­lic spend­ing.

For a state-owned en­ter­prise that has long been un­der fi­nan­cial scruti­ny, this tra­jec­to­ry could mark a turn­ing point—free­ing up re­sources for op­er­a­tional im­prove­ments, route ex­pan­sion or long-term cap­i­tal in­vest­ment.

How­ev­er, the sus­tain­abil­i­ty of this de­cline would de­pend on CAL’s abil­i­ty to main­tain prof­itabil­i­ty, man­age fu­el and labour costs and nav­i­gate re­gion­al com­pe­ti­tion in a post-COVID avi­a­tion land­scape.

This fi­nan­cial out­look, while promis­ing, un­folds against a back­drop of height­ened po­lit­i­cal scruti­ny and pres­sure.

The ur­gency of re­form was un­der­scored on Au­gust 11, when Prime Min­is­ter Kam­la Per­sad-Bisses­sar is­sued a stark ul­ti­ma­tum to CAL’s man­age­ment, de­mand­ing that they “sort out the mess” with­in two years.

Her di­rec­tive re­flect­ed grow­ing con­cerns over the air­line’s op­er­a­tional in­ef­fi­cien­cies and fis­cal dis­ci­pline, re­in­forc­ing the need for CAL to not on­ly sus­tain its debt re­duc­tion ef­forts, but al­so de­liv­er tan­gi­ble im­prove­ments in gov­er­nance and per­for­mance.

The PM gave the di­rec­tive as she spoke at a UNC’s Mon­day Night Re­port in Cou­va at which she ac­cused the air­line’s man­age­ment of fail­ing to do its job, pay­ing $60 mil­lion to EY and Price­wa­ter­house­C­oop­ers (PwC) for au­dits de­spite a large in­ter­nal fi­nan­cial team, fail­ing to sub­mit au­dit­ed fi­nan­cial state­ments for years and op­er­at­ing un­prof­itable routes.

She claimed CAL had not pro­duced an au­dit­ed fi­nan­cial state­ment for the last nine years and not one of its routes was prof­itable.

“No longer will we ac­cept tax­es paid by or­di­nary cit­i­zens, paid by teach­ers, paid by po­lice­men, small en­ter­pris­es…to up­keep CAL,” she added.

Ac­cord­ing to a Guardian Me­dia re­port dat­ed Au­gust 12, 2021, Caribbean Air­lines it­self re­leased unau­dit­ed fi­nan­cial re­sults show­ing an op­er­at­ing loss of US$48 mil­lion for the first half of the year.

In a 2024 Cus­tomer Ap­pre­ci­a­tion Event, then Fi­nance Min­is­ter Colm Im­bert, who was then CAL’s line min­is­ter, said the air­line had moved from an op­er­at­ing loss of US$36 mil­lion, ex­clud­ing debt ser­vice, in 2022 to a 2023 op­er­at­ing prof­it of US$24 mil­lion, mi­nus debt ser­vice.

How­ev­er, one year lat­er, Im­bert re­vealed an op­er­at­ing prof­it of just US$12.1 mil­lion – a drop of 51 per cent.

He at­trib­uted the de­cline to an in­crease in main­te­nance costs, han­dling costs and se­cu­ri­ty flight op­er­a­tion.

While these ris­ing op­er­a­tional costs have placed pres­sure on CAL’s prof­itabil­i­ty, the gov­ern­ment’s fis­cal strat­e­gy ap­pears to be shift­ing to­ward ag­gres­sive debt re­duc­tion.

CAL trans­fers steady

Trans­fers to CAL from the Gov­ern­ment are pro­ject­ed to re­main flat at $70 mil­lion in both 2025 and 2026, fol­low­ing an ac­tu­al al­lo­ca­tion of $72.99 mil­lion in 2024.

This mod­est de­cline and sub­se­quent sta­bi­liza­tion sug­gest a shift to­ward main­tain­ing base­line sup­port while en­cour­ag­ing greater fi­nan­cial in­de­pen­dence for the state-owned car­ri­er.

Spare en­gine ac­qui­si­tion

In the 2024 fis­cal year, the Gov­ern­ment record­ed a sub­stan­tial ex­pen­di­ture of $121.8 mil­lion for CAL, un­der the head­ing cur­rent trans­fers and sub­si­dies for the pur­chase of a spare LEAP-1B27 en­gine.

This in­vest­ment re­flects the air­line’s strate­gic fo­cus on fleet re­li­a­bil­i­ty and op­er­a­tional re­silience, par­tic­u­lar­ly as re­gion­al air trav­el re­bounds post-pan­dem­ic. The LEAP-1B27 en­gine, known for its fu­el ef­fi­cien­cy and re­duced emis­sions, is a crit­i­cal com­po­nent of CAL’s Boe­ing 737 MAX air­craft.

By ac­quir­ing a spare en­gine, the air­line aims to min­imise down­time, en­hance main­te­nance flex­i­bil­i­ty, and en­sure un­in­ter­rupt­ed ser­vice across its net­work.

BOX

Ac­cord­ing to its web­site, CAL is joint­ly owned by the peo­ple of T&T and Ja­maica, head­quar­tered in T&T, and with an op­er­a­tional base in Ja­maica.

Caribbean Air­lines em­ploys more than 1,600 peo­ple. The T&T Gov­ern­ment owns rough­ly 88 per cent of CAL, with the re­main­ing 12 per cent own­er­ship held by the Gov­ern­ment of Ja­maica.

The air­lines has ex­pe­ri­enced sig­nif­i­cant ex­ec­u­tive res­ig­na­tions re­cent­ly, in­clud­ing the CEO and sev­er­al key man­age­ment mem­bers, amid on­go­ing op­er­a­tional chal­lenges.

Ex­ec­u­tive de­par­tures:

* Kern Gar­diner, Ex­ec­u­tive Man­ag­er for Fi­nance, was ter­mi­nat­ed on Sep­tem­ber 16, days be­fore his pro­ba­tion end­ed.

*At the end of Au­gust, CAL’s Cor­po­rate Com­mu­ni­ca­tions man­ag­er, Dionne Ligoure, re­signed.

* Garvin Med­era, Chief Ex­ec­u­tive Of­fi­cer re­signed on Oc­to­ber 3

* Shameer “Ron­nie” Mo­hammed, for­mer chair­man, re­signed in May.

Rey­na Kow­lessar was ap­point­ed chair­man of a re­struc­tured board on June 24, re­plac­ing Shameer “Ron­nie” Mo­hammed, who re­signed fol­low­ing the gen­er­al elec­tion.

Kow­lessar pre­vi­ous­ly served as com­pa­ny sec­re­tary/head of Le­gal Ser­vices at The Na­tion­al In­sur­ance Prop­er­ty De­vel­op­ment Com­pa­ny Ltd.

Mo­hammed had been on the board since No­vem­ber 2016.

The cur­rent board re­ceived its in­stru­ments of ap­point­ment on June 24.

To date, Caribbean Air­lines has not is­sued any of­fi­cial state­ment con­firm­ing the terms of Med­era’s de­par­ture or ex­plain­ing the full scope of its re­struc­tur­ing.

The cur­rent board of Caribbean Air­lines (CAL) in­cludes:

Rey­na Kow­lessar - Chair­man

Videsh Praim - Vice-Chair­man (Fi­nance)

Dar­ren Ali - Di­rec­tor

Lau­ren Perth - Di­rec­tor

Sel­wyn Cud­joe - Di­rec­tor