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Caribbean Airlines to get $1.8 billion in gov't support

Featured Caribbean Airlines to get $1.8 billion in gov't support
The Trinidad and Tobago Government will provide Caribbean Airlines with a total of $1.8 billion in support during the period 2013 and 2015, according to figures revealed at the Standing Finance Committee of Parliament. Finance Minister Larry Howai said information from the the CAL management was that the company expected to break-even in three years, however Government would have to provide funds for the Trinidad and Tobago based airline in 2015, 2016 and 2017. Opposition Leader Dr Keith Rowley said CAL received $477 million in 2013, $570 million in 2014 and was estimated to receive $718 million. Diego Martin North East MP Colm Imbert  pointed out that in 2015, Government was really providing $730 million, in light of the Finance Minister’s disclosure that Government would be allocating an additional $11.3 million to CAL to assist it with debt repayment. Rowley revealed that there was a provision for an equity injection of $318.3 million in 2014, and asked when did this injection take place and why was it not made public? The Opposition Leader also asked how was Government going to deal with this support of $2.1 billion to CAL? The Minister of Finance said a restructuring plan had been put in place, which would lead to the gradual reduction of the subsidy over the next three years. He said however the airline would not reach a level of sustainability within the next three years. Howai said a big part of the subsidy arose from two issues “which are endemic to the airline”—the fuel subsidy which was approximately US$50 million and the subsidy to the Tobago airbridge was US$26 million, which totalled approximately US$78 million. He said the airline also incurred a loss on the Venezuela route as a result of the devaluation of the bolivar. “This was further impacted by the fact that you cannot get funds out of Venezuela at this point in time. So the monies to pay for that Venezuela route has been tied up and has further tightened the cash flows of Caribbean Airlines. That figure is US$45 million,” he said. He said some losses came from the integration of Air Jamaica. The Government of Jamaica owns 16% of Caribbean Airlines which arose when it absorbed Air Jamaica as a part of its operation. Rowley then asked for a proper breakdown of the $730 million. He said “throwing in the Tobago losses, which was an essential service” could confuse people. He asked whether the Minister was prepared to state what were the losses on the London route and losses on any other route. Rowley also asked what was the basis of the Minister’s acceptance of the management’s position that the airline would break even in three years when the trend did not support this. Imbert noted that outside of the Tobago subsidy and the fuel subsidy, $320 million was being provided in support to CAL in 2015.
Last modified onWednesday, 24 September 2014 13:02

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