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Monday, July 21, 2025

Taxpayers to foot $110 million bill for CAL retrenchment

by

1489 days ago
20210623
Minister of Finance Colm Imbert  during yesterday’s sitting of the Senate.

Minister of Finance Colm Imbert during yesterday’s sitting of the Senate.

OFFICE OF THE PARLIAMENT

  

The State will fi­nance the re­trench­ment of 25 per cent of staff at Caribbean Air­lines (CAL) at an es­ti­mat­ed cost of $110 mil­lion.

This was re­vealed by Fi­nance Min­is­ter Colm Im­bert in the Sen­ate yes­ter­day af­ter he was asked by Op­po­si­tion Sen­a­tor Wade Mark how the sev­er­ance pack­ages for the 450 em­ploy­ees would be fi­nanced.

On Mon­day, the air­line an­nounced it had suf­fered over $172 mil­lion in loss­es for the first quar­ter of 2021 and, in an ef­fort to en­sure a sus­tain­able busi­ness mod­el go­ing for­ward, it would be re­trench­ing up to 450 em­ploy­ees and cut­ting its fleet and routes.

Yes­ter­day, Im­bert said the air­line was at the be­gin­ning of the con­sul­ta­tion process for staff re­duc­tion and is fi­nal­is­ing the ex­act num­ber of per­son­nel to be sent home.

“Caribbean Air­lines does not have the re­quired fi­nances for the sev­er­ance pay­ments and there­fore the sev­er­ance pay­ments will be fi­nanced by the Min­istry of Fi­nance,” Im­bert said.

Asked by Mark the val­ue of the sev­er­ance pack­ages, Im­bert re­spond­ed, “The es­ti­mate giv­en to the Min­istry of Fi­nance at this time, which is sub­ject to fi­nal­i­sa­tion, is in the vicin­i­ty of $110 mil­lion.”

Mark al­so asked how the pro­posed re­trench­ment would af­fect CAL’s fu­ture op­er­a­tions.

Im­bert said the air­line had in­formed his min­istry that pas­sen­ger de­mands on its routes are fore­cast­ed to de­crease in the short to medi­um term by both the In­ter­na­tion­al Air Trans­port As­so­ci­a­tion (IA­TA) and CAL’s con­sul­tant, Amadeus.

He said he was told air traf­fic is fore­cast­ed to re­turn to pre-COVID-19 lev­els by 2023. Im­bert said with these pre­dic­tions, CAL has de­cid­ed to re­duce its fleet and sub­se­quent­ly, its staff com­ple­ment.

A variety of Caribbean Airlines (CAL) aircraft parked in hangers at the Piarco International Airport Monday.

A variety of Caribbean Airlines (CAL) aircraft parked in hangers at the Piarco International Airport Monday.

ABRAHAM DIAZ

He was asked for a break­down of the re­duc­tion in the fleet and re­spond­ed, “I am ad­vised and I must say I am sad­dened by all of this ... This is not some­thing that any of us would have want­ed to see. I am ad­vised that Caribbean Air­lines is go­ing to re­duce its jet fleet to eight jet air­crafts and its tur­bo­prop fleet to five ATRs.”

That takes its fleet down from the cur­rent 16 (sev­en ATRs and nine Boe­ing 737 jets) to 13.

“Any sep­a­ra­tion of work­ers is di­rect­ly as a con­se­quence of the re­duc­tion in the fleet size and re­duc­tion in the routes.

“Notwith­stand­ing re­duced air­line size, the routes will be op­er­at­ed at the high­est lev­el of safe­ty and ser­vice,” Im­bert said.

The min­is­ter said the com­pa­ny is putting in place sup­port sys­tems for any po­ten­tial­ly af­fect­ed work­ers. These in­clude coun­selling ser­vices for them and their fam­i­lies, through the Em­ploy­ee As­sis­tance Pro­gramme, out­place­ment ser­vices co­or­di­nat­ed with the ex­ter­nal re­cruit­ing agen­cies and Labour Min­istry, tran­si­tion­al train­ing re­gard­ing ca­reer guid­ance/sup­port and fi­nan­cial man­age­ment.

This is in ad­di­tion to com­pen­sa­tion pack­ages em­ploy­ees will be en­ti­tled to up­on sep­a­ra­tion.

Some in­ter­na­tion­al sites up to re­cent­ly had de­scribed CAL as the largest air­line in the Caribbean, em­ploy­ing 1,700 with 23 des­ti­na­tions, in­clud­ing some for­mer­ly op­er­at­ed by Air Ja­maica.

Ac­cord­ing to da­ta from CAL’s cor­po­rate com­mu­ni­ca­tion man­ag­er Dionne Ligoure, the air­line saw a mas­sive re­duc­tion in pas­sen­ger num­bers from the two pre­vi­ous years.

Ligoure said in 2018, CAL trans­port­ed 2,526,129 pas­sen­gers. In 2019, that num­ber in­creased slight­ly and the air­line record­ed 2,595,526 pas­sen­gers.

In 2020, how­ev­er, on­ly 741,676 pas­sen­gers were record­ed.

Ligoure said the air­line is still re­fin­ing its strate­gic plan in re­la­tion to which routes will be cut and which will con­tin­ue to be ser­viced.

She was un­able to give any da­ta about pas­sen­ger trav­el by route, as she said it was com­pet­i­tive­ly sen­si­tive in­for­ma­tion.

Asked whether the re­trench­ment will be done be­fore the mid-Ju­ly time­frame an­nounced by the Prime Min­is­ter for the re­open­ing of the coun­try’s bor­ders, Ligoure said, “The con­sul­ta­tions are tak­ing place over the next two weeks to a month.”

Guardian Me­dia Lim­it­ed reached out to Trinidad and To­ba­go Air­line Pi­lots As­so­ci­a­tion (TTAL­PA) ex­ec­u­tive ad­min­is­tra­tor Shelly Sadaphal, en­quir­ing whether the union had met with the com­pa­ny yet to dis­cuss the re­trench­ment.

Sadaphal said, “We are still await­ing com­mu­ni­ca­tion from CAL on that.”

But Ligoure dis­put­ed this, telling GML, “I can go on record to con­firm that the com­pa­ny con­tact­ed the union at 9.45. The de­tailed dis­cus­sions will take place in the com­ing days and weeks.”

Caribbean Airlines CEO Garvin Medera.

Caribbean Airlines CEO Garvin Medera.

Abraham Diaz

GML al­so tried con­tact­ing Bus­ta­mante In­dus­tri­al Trade Union (BITU) pres­i­dent gen­er­al Ka­van Gayle in Ja­maica for com­ment on the re­trench­ment. BITU is said to be the union rep­re­sent­ing CAL em­ploy­ees based in Ja­maica. Gayle read the mes­sages sent via What­sApp but up un­til press time, he had not re­spond­ed.

 

Grim out­look for air­lines glob­al­ly

In the In­ter­na­tion­al Air Trans­port As­so­ci­a­tion’s (IA­TA) Out­look for the glob­al air­line in­dus­try’s April 2021 up­date, the as­so­ci­a­tion fore­cast­ed a grim year ahead for air­lines across the world, with loss­es of ap­prox­i­mate­ly US$47.7 bil­lion in 2021.

This es­ti­mate was a mas­sive re­duc­tion from the loss­es suf­fered in the first year of the COVID-19 pan­dem­ic, es­ti­mat­ed to be US$126.4 bil­lion.

The fore­cast said in­dus­try rev­enues are ex­pect­ed to to­tal US$458 bil­lion in 2021.

How­ev­er, that amount is just 55 per cent of the $838 bil­lion gen­er­at­ed in 2019. In com­par­i­son, in 2020, the in­dus­try earned a mea­gre $372 bil­lion.

In its fore­cast, IA­TA in­cludes Trinidad and To­ba­go in its Latin Amer­i­ca group­ing.

In its break­down of loss­es and prof­its for 2021, the IA­TA re­port gave the fol­low­ing out­look for Latin Amer­i­can car­ri­ers: “Latin Amer­i­can car­ri­ers are ad­van­taged by hav­ing al­most half (48%) of their RPKs (rev­enue pas­sen­ger kilo­me­tres) be­ing gen­er­at­ed on do­mes­tic mar­kets, in par­tic­u­lar the large Brazil­ian home mar­ket. They are start­ing from rel­a­tive­ly large loss­es in 2020 and, in some parts of the re­gion, a slow rate of vac­ci­na­tion. Rev­enues from the growth in do­mes­tic trav­el are fore­cast to cut net loss­es by more than two-thirds this year—to -20.4% of rev­enues in 2021 from -80.1% in 2020.”

The re­port al­so states that Latin Amer­i­can air­lines should ben­e­fit from large home mar­kets but added that the out­look is ‘cloud­ed” by the chal­lenges of con­tain­ing vari­ants of the COVID-19 virus and slow roll­outs of vac­ci­na­tion pro­grammes.

Browne: Re­trench­ment over­due

For­mer Min­is­ter in the Min­istry of Fi­nance, Mar­i­ano Browne, says Caribbean Air­line’s plans to re­struc­ture and cut staff are over­due.

In an in­ter­view with Guardian Me­dia yes­ter­day, Browne said CAL had been af­fect­ed very bad­ly by the shut­downs brought on by the pan­dem­ic.

He said al­though the air­line’s fleet would have been ground­ed, it would still have been pay­ing on its month­ly leas­es to re­tain those air­craft.

With T&T’s bor­ders closed since late March 2020, Browne said state-owned CAL got the short end of the stick.

“CAL, un­for­tu­nate­ly, has been stuck, it is owned by Gov­ern­ment so, there­fore, it can’t con­tra­dict Gov­ern­ment poli­cies and it can’t put any pres­sure on the Gov­ern­ment to change its poli­cies, but there must be some kind of change in the pol­i­cy,” he said.

He said the en­tire ex­emp­tion process was “back­ward,” adding once the bor­ders re­open, Gov­ern­ment al­so needs to be clear on its quar­an­tine poli­cies.

He ques­tioned what the en­try pol­i­cy would be like, ask­ing whether those who are ful­ly vac­ci­nat­ed will be re­quired to quar­an­tine up­on en­try.

Prime Min­is­ter Dr Kei­th Row­ley, at a me­dia con­fer­ence on June 19, said in­com­ing trav­ellers will be dealt with in sep­a­rate groups for those who are vac­ci­nat­ed and un­vac­ci­nat­ed and the State’s cri­te­ria for en­try will be de­ter­mined by the Min­istry of Health in the com­ing weeks.

Yes­ter­day, Browne said, “All of those are things that have to be ad­just­ed, there are ex­am­ples of how this has been han­dled else­where in the Caribbean, in Bar­ba­dos in par­tic­u­lar, which has been very suc­cess­ful in how it has been man­ag­ing. We have been quite back­ward in do­ing that and that is not CAL’s fault, that is the fault of the peo­ple who have to make the de­ci­sions, cer­tain­ly in re­spect to na­tion­al se­cu­ri­ty and every­thing else that takes place in terms of the man­age­ment of air­port traf­fic.”

He said he be­lieves CAL has done all it can at this time to stay afloat.


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