[Editorial] Caribbean Airlines’ future on the line

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bimjim
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[Editorial] Caribbean Airlines’ future on the line

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https://trinidadexpress.com/opinion/edi ... f4709.html

[Editorial] Caribbean Airlines’ future on the line
18 April, 2021

Given its current financial condition, one would have expected Caribbean Airlines to grab the first chance to get out of its contract for 12 new Boeing 737 Max planes without penalty.

However, as reported in yesterday’s Sunday Express, the airline’s board has decided not to take the option and to press ahead with the deal.

As a State enterprise carrying substantial debt, and having suffered an operating loss of $738 (US$123) million in 2020, CAL’s board should publicly disclose its rationale for a decision which, at least on the face of it, seems counter-intuitive. At a time when the Prime Minister is telling the public that the country has no more money, even to cushion the socio-economic blows from the Covid-19 pandemic, one would hope that CAL’s request for approval of the 737 Max deal will be thoroughly interrogated by the Cabinet.

For its part, the public does not have enough information on this matter to take an informed position. This is hardly surprising given that those entrusted with managing public assets usually see no value in accounting to the public except in the most perfunctory way. However, it may be argued that there is merit in proceeding with the deal given the projected rise in post-pandemic demand for air travel. CAL may also benefit from compensatory discounts due to delivery delays caused by the grounding of the Max 8 in March 2019 following two deadly crashes.

It would be useful to know the projections on which CAL is basing its decision to proceed with the order for the 12 planes. While in theory the Covid-19 vaccine is expected to propel a rebound in leisure travel, the reality remains so fluid that some airlines cannot commit to major investments.

In the US, for example, domestic carrier Southwest Airlines placed an order for an astonishing 100 Max aircraft last month. In contrast, international carrier American Airlines last week announced its decision to postpone delivery of over three dozen Boeing aircraft, including 18 Max jets, from this year to 2023 and 2024.

In late 2018, when CAL first placed its order for 12 aircraft with the first four then due to arrive on dry-lease at the end of 2019, chairman Ronnie Mohammed said the acquisition was key to the airline’s longer-term strategy of opening of new markets while providing significant advantages on operating cost, especially fuel and maintenance.

One year after the pandemic slammed into its bottom line, the issues facing CAL go well beyond its fleet. Unlike Southwest and American Airlines, Caribbean Airlines is 84 per cent-owned by the State. Its survival depends on the availability of public funds to carry it through the pandemic and beyond. In February, Finance Minister Colm Imbert put the cost of the airline over the past year at $700 (US$120) million. Over the period, CAL’s staff has been severely reduced while the operation has shrunk to the airbridge and occasional passenger and cargo flights as approved by the government.

The issue facing CAL is not simply about a new fleet but about the future of the airline and the shape of that future. Let’s talk about that first.



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bimjim
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Re: [Editorial] Caribbean Airlines’ future on the line

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So you telling me that the Digicel telecommunications team not really working out so well, eh? Allyuh should put in a team from the ice cream factory next, and when they done lose another $700 million then try a team from the septic tank people...

Them retarded big mout people in politricks never, never learn -- but remember, is only "free" public money so dem doh give a damn anyway.

Eh eh, is only an airline. Anybody could play wid dat little ting and get through, right?
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