Ashford W. Meikle, Staff Reporter
LAWRENCE
EXECUTIVE CHAIRMAN of Air Jamaica Dr. Vin Lawrence disclosed yesterday that the government is contemplating writing off US$398 million (J$24.7 billion) of the whopping US$847 million (J$52.5 billion) the airline accumulated in losses when under private ownership.
The losses represent a little under seven per cent of the national debt, while the write off being sought would be the equivalent of nearly four per cent. The national debt stands at $J762.5 billion.
Dr. Lawrence said the airline's restructuring team has already made the submission to Cabinet, which, according to him, "has expressed a willingness to consider it."
APPROACHED FINANCIAL
INSTITUTIONS
"Government is considering converting US$398 million of debt that Ar Jamaica owes the state into equity," Dr. Lawrence told re-porters at a press conference at the Air Jamaica Building on Harbour Street in downtown Kingston.
The airline, he said, will now be seeking additional financing to stay afloat. "Based on our five-year business plan we have approached financial institutions to raise long term financing of US$255 million dollars (J$15.8 billion)," he added.
"Some have indicated a willingness to enter into business with us and the government is prepared to guarantee any reasonable loan agreements."
Apart from its debt to the government, the airline owes another US$370 million (J$22.9 billion) to trade creditors and an additional US$125 million (J$7.7 billion) to the banks. With losses of US$83 million ($J5.1 billion) in 2004, Air Jamaica now has accumulated a deficit of US$847 million (J$52.5 billion).
After accumulating massive losses under the Gordon 'Butch' Stewart led acquisition group, Air Jamaica was brought back under public ownership several months ago.
A transition team, headed by Dr. Lawrence, was appointed to straighten out the airline's finances and with the hope of making it a viable operation, which could once again attract private investors.
The airline has encountered substantial problems however, forcing it to be flying with only about half of its fleet.
Dr. Lawrence blamed the now routine delays and cancellations to changes in the airline's maintenance schedule.
"The fact is that from 2001, Air Jamaica had obtained permission from the Jamaica Civil Aviation Authority ((JCAA)) to carry out major maintenance on an eighteen-month cycle to which the airline had scrupulously adhered," he said. "This eighteen-month cycle was actually two months within the aircraft manufacturer's recommended twenty-month cycle."
He said the problems being experienced now were a direct result of new regulations by the United States' Federal Aviation Authority ((FAA)).
"The FAA after carrying out an audit around December 9, 2004, questioned the airline's maintenance schedule and insisted through the JCAA that the cycle be reduced immediately to fifteen months," he said.
"Our reliability and proud on time performance record have been compromised and we have lost millions of dollars in revenue."
Of its original fleet of 20, the airline has just 10 aircraft currently flying .
