By Dennise Williams, Staff Reporter
Dr. Vincent Lawrence (left), executive chairman of Air Jamaica; Aubyn Hill (right), the airline's chief restructuring officer, and Paul Pennicook, director of tourism, in conversation yesterday following a press briefing to announce changes at the airline. The briefing took place at Air Jamaica's Harbour Street offices, downtown Kingston. - Rudolph Brown/ Chief Photographer
A BIG salary cut from the executive staff and the slashing of unprofitable routes, are but two of the steps being taken by the new management of Air Jamaica in a desperate bid to save the cash-strapped airline.
According to executive chairman Dr. Vin Lawrence, the air-line "has no money" and is in "a survival mode". He made the assessment at a press conference held yesterday at Air Jamaica's headquarters on Harbour Street, downtown Kingston where he also warned that redundancies were inevitable.
Members of the airline's executive staff, numbering about 50 out of a staff complement of 3,000, have agreed to an average salary reduction of 18 per cent, resulting in annual savings of US$1 million (J$62 million) Dr. Lawrence disclosed.
UNPROFITABLE ROUTES
Unprofitable routes targeted for slashing are Antigua, to which the airline will no longer fly after January 10, while February will see the elimination of the Manchester/England and London/Havana routes.
The airline's audited 2003 reports also painted a bleak picture, showing accumulated losses of US$602 million (J$37 billion) and a deficit of US$418 million (J$26 billion). Unaudited reports for 2004 show losses of US$90 million (J$5.6 billion).
"I can't stress too strongly that Air Jamaica is in deep trouble. The Government of Jamaica is not in a position to support Air Jamaica as it has been required to over the last five to 10 years," Dr. Lawrence emphasised.
He also warned that "significant cost restructuring is necessary for the airline to survive."
SIGNIFICANT SACRIFICE
"It is important to recognise that with the high losses the airline faces, no improvement can be had without significant sacrifice from all parties," Dr. Lawrence stressed.
The new management has moved to simplify employee payment arrangements and effect redundancies.
"This will be immediate and comprehensive across the company. However, we cannot say at this point how many staff members will be right sized or what changes to compensation will take place," Dr. Lawrence added.
Talks, he said, will begin with the staff, including pilots, and the unions representing them by Friday of this week.
Additionally, Air Jamaica will be looking at returning three airplanes out of its fleet of 20 in order to save on its leasing costs. Further cuts will be in the areas of operations as the airline moves to consolidate its offices worldwide.
Said Lawrence: "Air Jamaica lost the ability to raise funding and this compounds its difficulties. In fact, because Air Jamaica could not get additional capital, this prompted the Government to take back control of the airline."
Since retaking the airline on December 23 last year, the Government has been able to secure financing - US$35 million (J$2.1 billion), including US$5 million (J$310 million) of the US$20 million (J$1.2 billion) committed by Gordon 'Butch' Stewart, the former chairman.
Dr. Lawrence revealed that the management team had started to look at ways to restructure large amounts of the airline's liabilities, including having meetings with creditors while seeking long-term financing for the airline.
