House Approves Government Guarantee for Air Jamaica Loans
June 10, 2009The Full Story
The House of Representatives, yesterday (June 9), approved a Government guarantee for loans valued at US$101.8 million to Air Jamaica Limited, in support of the funding requirements for its approved business plan for the financial year 2009/10.
According to a Ministry Paper tabled by Minister of Finance and the Public Service, Hon. Audley Shaw, Air Jamaica is now operating under a new business plan, which proposes to stabilise the airline and make it more attractive for divestment.
The objectives of the plan include refocussing the operations of the airline; resizing its fleet and increasing aircraft utilisation and productivity by a reduction in the size of the fleet from 15 to 9 aircraft; and an increase in the average utilisation of aircraft from eight hours to 10 hours per day.
The plan also projects net operational loss and transition cost equivalent of US$63.2 million for the 12-month period ending December 2009; and identifies a financing requirement equivalent to US$150 million – US$135 million for January to June and US$15 million for July to December 2009.
In his address, Mr. Shaw indicated that since the implantation of the business plan, Air Jamaica has begun to show “marked results in its operations.”
“They have sought, among other things, to cut loss making markets, what they refer to as non core markets. They have cut Los Angeles, Atlanta, Grand Cayman, Jamaica to the Eastern Caribbean and they have also consolidated Miami into the Fort Lauderdale slot,” Mr. Shaw said.
“Among the key performance indicators for aircraft utilisation (hours per day), there has been a minor decline in the actual utilisation in 2009 over 2008; so far 7.7 hours compared with 7.8 hours in 2008. The dispatch reliability has improved from 93 per cent to 99 per cent; on time performance has improved from 52 per cent to 63 per cent year to date; and the passenger load factor has improved from 64 per cent to 69 per cent,” he added.
Air Jamaica Limited has, to date, negotiated financing facilities with the Bank of Nova Scotia Jamaica Limited; National Commercial Bank Jamaica Limited; National Commercial Bank Capital Markets Limited; First Global Jamaica Limited; International Lease Finance Corporation, and CIT Aerospace.