Trinidad: CAL seeking Govt support to guarantee US$65m loan

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Trinidad: CAL seeking Govt support to guarantee US$65m loan
GROUNDED BY VIRUS: One of Caribbean Airlines’ newly rebranded ATR 72-600 planes. Photo courtesy CAL.
GROUNDED BY VIRUS: One of Caribbean Airlines’ newly rebranded ATR 72-600 planes. Photo courtesy CAL.

(TRINIDAD EXPRESS) – NATIONAL carrier, Caribbean Airlines (CAL), has asked its majority shareholder, the Government of T&T, to guarantee a US$65 million ($441 million) loan to help keep it afloat in the coming months.

The company’s revenues have been hit since borders closed around the region and on its North American routes to contain and stop the spread of COVID-19.

CAL’s fleet, which comprises Boeing 737-800 and ATR72-600 aircraft, has remained, for the most part, grounded.

Its cargo business is still operational as well as the airbridge.

The Express was told that CAL’s Request for Proposal (RFP) for the loan was sent to the Ministry of Finance before the COVID-19 pandemic hit it region.

CAL, which is 84-per cent owned by the T&T Government and 16 per cent by the Jamaican government, is seeking a Government-guaranteed loan which the airline would finance, the Express was told.

CAL’s inability to generate revenues from selling seats to regional and international passengers is impacting the airline’s cash position, as has occurred with many airline across the world.

As it stands, CAL has just enough cash to pay its employees until the end of April.

T&T’s borders closed on March 23 and will remain closed until April 30.

“Work continues on ensuring we have sufficient funding to support the airline and I remain hopeful. Currently, we expect to fund salaries for April. I will provide further information about longer term plans once we are clear on the levels of external funding available to us later this month,” said chief executive Garvin Medera, in an e-mail to the company’s senior staff on Friday.

The Express was told that CAL sent most of its pilots on vacation leave for the whole of April.

CAL’s chairman Shameer Mohammed confirmed that the airline is seeking support from the Government which he hopes will come through by the end of the month.

“We have engaged our shareholders for liquidity support. This support is no different from what airlines around the world are going through right now. CAL remains confident that the right approach is being taken to ensure the continued existence of the airline post-Covid,” he told the Express in a telephone interview yesterday.

On March 12, when T&T recorded its first COVID-19 case, CAL was set to host a re-branding function, which was cancelled.

In November 2018, CAL announced that it had leased 12 of Boeing’s Max 8 to replace its aging fleet and had made a downpayment of US$7 million for the new planes which is now on hold pending FAA approval.

Earlier this year, CAL leased an additional ATR aircraft to compliment its fleet operating throughout the region and on the airbridge.

“Caribbean Airlines has a mandate to make regional travel easier and more convenient while strengthening connectivity and improving the reach and efficiency of its network. At Caribbean Airlines, our objective is very clear. We intend to be the most efficiently run and sustainable airline in the region. We intend to be the best airline in terms of on-time performance and to continuously delight our customers, making them happier and making their journey easier and smoother,” it said at the time.

Last year, the company released its unaudited 2018 financial results which said that the airline made a profit of $42 million.

The statement showed that while the airline recorded $158 million in earnings before interest and tax on international routes, it made negative $47 million on the airbridge. The company’s net income from international flights and other operations was $109 million, while domestic airbridge operations made a net loss of $67 million with total revenues increased by 11 per cent to $292 million.

The last time CAL, which is majority-owned by the Government, presented audited annual financial statements to the public was in 2015, for its 2014 performance, when it recorded a US$60 million loss.

On May 27, 2011, the acquisition of Air Jamaica was completed, with Finance Minister Winston Dookeran and Jamaican Finance Minister Audley Shaw at the Prime Minister’s St Clair office signing the shareholding agreement. This agreement allows the Jamaican government to own a 16 per cent stake of Caribbean Airlines Ltd.

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