Air Jamaica sold - First murmurs about who has bought the national carrier have surfaced
Published: Saturday | July 4, 2009
The Gleaner has learnt that Indigo Partners and Oaktree Capital, who are reportedly the owners of Spirit Airlines, have bought the country's national carrier, Air Jamaica.
It is further understood that Air Jamaica's name might be changed to Spirit of Jamaica.
Sources close to the negotiations are tight-lipped, but they have confirmed that Trinidadian-owned Caribbean Airlines did not win the bid to take over the Jamaican airline.
The news comes days after the Privatisation committee, which has been managing the task of privatising Air Jamaica, submitted its recommendation to Senator Don Wehby, minister without portfolio in the Ministry of Finance.
It also comes at a time when the airline is reporting an operational surplus for the first time in 10 years.
On Tuesday, Wehby disclosed that the Privatisation Committee, chaired by Dennis Lalor, had submitted to him the evaluation and recommendation report on the privatisation of the national carrier.
In a media release, the minister said that the committee - assisted by expert input from the International Finance Corporation, which is the private-sector arm of the World Bank Group, and which has a record of more than 150 successful assignments in some 60 countries - had negotiated strategically with the two top investor prospects and had made a final recommendation for the signing of a document of agreed terms with one party. The terms include a provision for the Government of Jamaica to maintain a minority equity stake in the airline.
Some stakeholders in the tourist industry would not be disappointed with this outcome. Many have confided that this would be good move on the part of the Air Jamaica divestment team.
"Spirit is already mean and lean and that is exactly what Air Jamaica needs in order to strategically grow," said one hotelier, adding that the routes plied by both carriers might be complementary.
Earlier, Spirit had announced the completion of a strategic investment, led by Indigo Partners LLC and funds managed by Oaktree Capital Management LLC. The investment will provide significant resources for the company to consolidate its position as the leading low-cost carrier to the Caribbean, and pursue its long-term growth strategy.
Indigo Partners LLC, with offices in Phoenix, Arizona and Singapore, is a private-equity fund focused primarily on investing in the transportation, airline and airline-related sectors globally.
Oaktree Capital Management LLC is a Los Angeles-based private investment firm that manages in excess of US$30 billion in select niche investment markets for institutions and wealthy individuals.