John Myers Jr, Senior Business Reporter

Air Jamaica is set to lose $108 million during the present financial year

The global slowdown in aviation and financial markets, and Jamaica's own economic uncertainty, will not derail plans for the divestment of national carrier Air Jamaica, says Senator Don Wehby.

Wehby, the minister without portfolio in the Finance Ministry, told Wednesday Business that the timetable for selling the airline was still March 2009.

"We are looking for a major international airline partner, who'll be able to deliver operational efficiencies and expand alliances, so that Air Jamaica becomes a viable option for more people around the world, not just those in the 20 destinations now served by the airline," said Wehby, who has portfolio responsibility for the carrier.

JA retaining a stake

He also indicated that Jamaica would be retaining a stake in Air Jamaica, but declined comment on the portion being sold, saying it would breach the confidentiality agreements with the parties helping to cobble the deal.

"By that time," he said, referring to the timetable, "the Government of Jamaica expects to transfer majority ownership and management control of the airline to the private sector."

World aviation has been reeling from rampant fuel prices in a volatile oil market that saw crude hitting US$147 per barrel before retreating to the current US$80.

But, while the financial crisis has served to tame oil prices for now, airlines now face the prospect of a dampened travel market as equity investors' net worth erode.

Wehby acknowledged the downturns but appeared undeterred by them.

"These are tough times in aviation. In fact, these are tough times in the global economy," he said.

"We see the divestment as an important opportunity for Air Jamaica to thrive, as it will bring the capital and the expertise needed to beat the challenges."

For the first week of October, the US stock market lost US$2.2 trillion of value, but regained about US$1 trillion Monday when the Dow closed up more than 900 points.

But, even before the global financial meltdown and record oil prices, Air Jamaica was struggling.

New CEO Bruce Noble, whose appointment was announced at the weekend and could be short-lived if the sale goes through, takes over a carrier whose balance sheet is weighed down by J$86 billion (US$1.2 billion) of accumulated losses, J$12 billion (US$170 million) incurred last year alone.

Notwithstanding the mounting losses, projected to be even larger this year because of rising operational costs, Wehby says Air Jamaica is the leading airline in the region and still a valuable asset.

Total market share

"Air Jamaica has a total market share of 44 per cent. That's comprised of 50 per cent of all Jamaican passengers and 31 percent of all visitors, which is nearly twice the number of visitors carried by any other airline," the minister said.

Nobles, the president of the United States-based aviation consulting firm, The Renwick Company, has been appointed to lead Air Jamaica into divestment.

Nobles, who has worked with Air Jamaica before, from June 2002 to March 2003, has been credited with leading the successful restructuring of Hawaiian Airlines.

There have been rumours that China has expressed an interest in Air Jamaica. However, Wehby would not confirm nor deny the reports, citing the confidentiality clause that the government has signed with the International Financial Corporation which has been contracted to divest the airline.

john.myers@gleanerjm.com