Air Jamaica must go! - No clear plan if divestment fails

The new president of Air Jamaica has admitted that there is no clear plan for the future of the loss-making airline if management fails to divest the carrier by the March 31 deadline.

Bruce Nobles, who recently returned for a second stint at the airline as president and chief executive officer, yesterday made it clear that the endgame was the divestment of the airline to an entity with deep pockets and, if that is not done, there is no clear backup plan.

"If for some reason that (the divestment) doesn't work, obviously, we would have to come up with a contingency plan, but I can't predict right now and I wouldn't want to predict what that would be," Nobles told The Gleaner at a media briefing at the Terra Nova All-Suite Hotel, St Andrew, yesterday.

While accepting that worldwide economic conditions did not make an airline particularly attractive at this time, Nobles said Air Jamaica was going to the market with many positives.

"The brand is a very powerful brand," he said. "There is also a very solid core of Jamaicans who support Air Jamaica in ways that go well beyond a rational attachment. There is an emotional attachment inJamaica and other places around the world," Nobles added.

The Bruce Golding-led administration has already made it clear that it does not want the cash-bleeding airline on the books when it prepares the 2009-2010 Budget, and the airline's management is in talks with several suitors to ensure that the divestment takes place.

Nobles appeared optimistic that the management was on track to rid the country of the carrier which has been a drain on the budget for decades.

"The prime minister has said to me very directly that we need to get Air Jamaica off our books by March 2009, because the country simply cannot afford it," Nobles said.

Nobles later told The Gleaner that, just over a week ago, Cabinet approved a business plan for the airline and he has been given one week to suggest any change which would improve the document.

Divest by the deadline

According to the Air Jamaica president, he and his team, including the chairman of the board, Shirley Williams, have been in discussion with potential purchasers to ensure the divestment is completed by the deadline.

An offer document was released to interested parties less than one month ago, but The Gleaner was unable to confirm the deadline for responses.

According to Nobles, the airline's management is in talks with several potential investors with the aim being to have an agreement by the end of this year and the divestment deal finalised by the March deadline.

The Government has contracted the services of IFC, the private sector arm of the World Bank, as consultants/advisers in the divestment process.

IFC is expected to lead an international competitive bidding process which will be used to identify prospective investors who have the technical and financial strengths to operate the airline.


Air Jamaica losses

Air Jamaica has accumulated losses in excess of US$1 billion (J$75 billion).


The airline lost US$170 million (J$12.92 billion) last year.

source:jamaica gleaner