Air Jamaica Board to Decide on Staff Cuts Over Next Few Days

The employee restructuring exercise at Air Jamaica, recommended by management consulting firm, SABRE Airline Solutions, would be “immediate and comprehensive” and as such, consultations would be held over the next couple of days to decide on what scale staff cuts would be effected, the company’s Executive Chairman, Dr. Vin Lawrence has said.
Dr. Lawrence, who was speaking at a press conference held at the company’s Harbour Street offices in Kingston this morning, said that there was an urgent need to simplify employee compensation policies and implement them and to make these affordable for the company.
The board has already met with the executive management team, including those from sales and marketing operations based in Florida and had reviewed the financial status of the organisation.
Meetings have also been held with the leadership of the trade unions and some staff members. “We plan to meet with as many members of staff as possible in all categories during this week, including with the Airline Pilot’s Association. It is hoped that the meeting with this group will take place by Friday”. The airline presently employs some 3,000 persons.
Dr. Lawrence also commended the Executive Management team for having stepped up to the plate and accepted an average compensation reduction of 18 per cent, ranging from 10 per cent up to 30 per cent.
The move, he said, would result in direct annual savings of US$1 million to the company. According to Dr. Lawrence, it will cost between $160 million to $200 million over the next five years to finance the airline’s operations.
Meanwhile, Dr. Lawrence said that provisions for an Employee Share Ownership Programme (ESOP), which were made when Air Jamaica was privatized 10 years ago, would also be withdrawn. “It should be noted that not one share of the 10 per cent of shares reserved for pilots and general staff was taken up. At this stage, we do not believe it will be feasible to consider this issue,” the chairman rationalised.
As a further cost saving measure, Dr. Lawrence announced that as of January 10, Air Jamaica will cease flights to Antigua and in February, flights to Manchester and the London/Havana route will be terminated.
He said that the interim board had decided to rationalize these routes as they were “uneconomical.” Dr. Lawrence said that detailed analysis of the company over the last week has reinforced the Sabre Report findings and the consequent urgency to restructure the airline for continuity, viability and excellence.
To this end, four subcommittees of the board have been appointed. The Finance and Operations sub-committee will be chaired by Director of Air Jamaica, O.K. Melhado; the Audit Committee will be chaired by government’s representative on the board, Keith Senior; while Senator Noel Sloley will chair the Marketing Committee. The Personnel and Compensation Committee will be chaired by Dr. Lawrence until the end of this month, when a decision will be made regarding the chairmanship of this subcommittee.
The new Air Jamaica board has been given a six-month time frame to put the necessary measures in place to return the national airline to viability. Supporting Dr. Lawrence is former National Commercial Bank (NCB) executive, Aubyn Hill, who heads the restructuring office. Other members of the board are Bank of Jamaica Governor, Derick Latibeaudiere; Executive Director of the Jamaica Tourist Board, Paul Pennicook; Accountant General, Millicent Hughes; and President of the Port Authority of Jamaica, Noel Hylton.
At a December 23 press conference to announce the government’s take over of the airline and the appointment of the interim board, Minister of Finance and Planning, Dr. Omar Davies underscored that, “this administration has no desire to retain permanent ownership and control of Air Jamaica. Our objective is to restructure the entity, such that it will be able to attract adequate equity capital from private investors”.