(Trinidad Express) Don’t expect national carrier Caribbean Airlines (CAL) to turn a profit within the next 24 months.
That’s the word from airline chairman Rabindra Moonan.
In
an interview with the Sunday Express yesterday, Moonan said the airline
had embarked on several initiatives to rationalise assets and turn CAL
into a more efficient operation.
Even so, it will be a while before the airline can become a profitable enterprise.
“Caribbean
Airlines is at present not performing above the line, but there are
many reasons for this situation—funding for the ATR fleet and wet leases
to adequately satisfy the demands of the traffic throughout the system
are just two instances which have impacted the bottom line. Rest
assured, however, that everything is being done to reverse the situation
in the shortest possible timeframe,” he told the Sunday Express.
A few months ago, CAL faced what was described as “operational risk” in the face of mounting debt.
On
May 4, former finance minister Winston Dookeran disclosed to Parliament
that the airline made an unaudited loss of US$52.8 million (TT$339.5
million) for 2011 while subsidiary Air Jamaica recorded an unaudited
loss of US$38.1 million (TT$245.2 million) for 2011.
The Sunday
Express had also reported exclusively that CAL’s liabilities was about
US$100 million, the majority of which was owed to France’s Aviones de
Transport Regional (ATR).
Moonan said the airline was meeting its
financial obligations with regard to fees to airports, its fuel bill,
and it had not defaulted on any obligations.
“We are using any
line or length of credit that is available to us. We also have to keep
in mind the purpose of the airline, which is to bring people of the
region into the country. Now, that money is not reflected in the balance
books of CAL, but it would impact on the GDP of the country,” he said.
Asked
if the company was making money from its Air Jamaica investment, Moonan
responded: “The company is not yet realising any profits from its Air
Jamaica operations. On that side of the business, stiff competition from
several low-fares airlines out of the US has caused CAL to revisit its
strategies and its cost structure, which we are progressively working on
in an effort to level the playing field.”
Since the acquisition
in 2010, the Sunday Express understands the actual performance for the
Air Jamaica operation, from May to December 2010, was a loss of US$21
million “for various reasons” and US$38 million for 2011 (the 2011
figure has to be contextualised given that there was an adjusted jet
fuel subsidy from US$1.50 to US$2.34 a gallon).
While Moonan did
not give data on the present state of affairs at the airline, he
explained that CAL was now rationalising assets.
As part of that operation, CAL is trying to dispose of its Dash-8 fleet. The ATRs were acquired to replace the Dash-8s.
“Caribbean
Airlines has experienced some reliability issues with the new ATR
aircraft. It must be remembered, however, that these airplanes are
state-of-the-art, and CAL is only the fourth airline in the world and
the first in the region to operate these aircraft and such teething
problems are not really unexpected. ATR engineers are on the ground at
Piarco to assist,” said Moonan.
He said the airline did not hope to raise money from the disposal but rather was seeking to reduce costs.
“To
operate two separate fleets means pilot training and two sets of
inventories. It’s a major initiative to reduce costs,” he said.
He noted the airline was also in the process of reviewing its routes.
The airline has already dropped one route, from Montego Bay to Philadelphia, USA.
“We will look to consolidate flights and run more during the peak periods and less during the off periods,” he said.
“Caribbean
Airlines is constantly seeking innovative ways to become more
cost-effective in its operations as it moves to become a profitable
entity, and that transcends every facet of the operation, from ticket
sales to aircraft maintenance.
“A few months ago, executive
management presented to the board a number of initiatives aimed at
reducing overall costs and included strategies to deal with its direct
and indirect competition, revenue generation and plans for greater yield
on all its routes,” he said.
Moonan insisted the airline will one day turn a profit.
“The
airline will be profitable, but it is almost impossible at this stage
to forecast a specific time frame in which such welcome results will be
achieved. The signs are there for a better 2013,” he said.
Two weeks ago, CAL was given national carrier status to Guyana.
Moonan said this will further open up more opportunities for the airline as CAL can relocate some of its maintenance staff.
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