In 2010, Port-of-Spain and Kingston agreed to a deal that allowed the Jamaica government to own 16 per cent of CAL as part of the conditions for CAL taking over the lucrative routes of Air Jamaica. Photo: Caribbean 360

Last week CAL Communications Manager Clint Williams confirmed to the media that the airline would be cutting back on the number of flights to Jamaica, effective April 16.

Transport Minister Dr. Omar Davis said the decision by the cash-strapped airline would contradict the agreement signed when CAL acquired Air Jamaica two years ago.

Davies said the only tangible weapon the government has relates to the use of the Air Jamaica brand.

He said there have also been challenges in discussing changes at CAL with the Kamla Persad Bissessar government and crucial information has not been forthcoming from that end.

In 2010, Port-of-Spain and Kingston agreed to a deal that allowed the Jamaica government to own 16 per cent of CAL as part of the conditions for CAL taking over the lucrative routes of Air Jamaica.

The deal also allows for Trinidad and Tobago agreeing to a US$300 million transition plan for CAL to acquire and operate six Air Jamaica aircraft and eight of its routes.

When it came to office following the May 24, 2010 general election, the five-party coalition government of Prime Minister Persad Bissessar said it would review the accord, but then finance minister Dookeran later announced that the government was okay with the agreement.

When he signed the agreement with his then counterpart Audley Shaw in 2011, Dookeran said Caribbean Airline would now “have legal access to all the routes that were being flown by Air Jamaica, giving it an opportunity to expand in the global arena”.

Davies said he was also concerned about what he cited as the “discriminatory hiring practices” of CAL after 15 flight attendants’ positions were cut at the airline's Jamaican operations and some Jamaican pilots, based in Trinidad were sent home last month.

The opposition Jamaica Labour Party (JLP) has also raised concern about the reduction in flights, saying the decision is contrary to the deal, which was reached for the airline to acquire Air Jamaica.

Over the weekend, CAL said that it was seeking financing from banks in Trinidad and Tobago to deal with a US$234 million debt.

CAL chairman Rabindra Moonan told the Sunday Express newspaper that the airline had reached a “delicate stage” in its negotiations with a bank for long-term financing.

He said the Trinidad and Tobago government would act as a guarantor for a loan.

The newspaper said that CAL’s cash crunch was at a critical point in February which led the International Lease Finance Corporation - from which the airline gets its commercial jets- to seek a meeting with CAL’s management to attempt to repossess the aircraft because the company was defaulting on its payments.

According to its financial statements for 2012, CAL’s losses moved from US$43.6 million in 2011 to US$83.7 last year.

Moonan told the Sunday Express that while CAL has “suffered heavy losses” in Jamaica, the acquisition was a government-to-government relationship and the government should comment on it.

Apart from an initial US$50 million for acquisition of routes, Dookeran told the Trinidad and Tobago parliament that Air Jamaica recorded an unaudited loss of US$38.1 million for 2011. 

The newspaper said that CAL will cut jobs in its Jamaican operations this week.

In May last year, the head of the divestment team involved of the sale of Air Jamaica, Dennis Lalor, rejected claims that the airline’s multi-million dollar debt is to blame for CAL’s current financial problems. 

“The Government of Jamaica assumed all liabilities of Air Jamaica, providing CAL a clean slate as it relates to Air J’s operations,” Lalor told the Jamaica Observer newspaper, adding that this was done to ensure that CAL would have no disadvantages when it got the Air Jamaica brand.

“In addition, the Government of Jamaica provided CAL with cash of over US$17 million, which represented tickets prepaid for by customers not yet flown.”