In 2006, the T&T government realised that British West Indian Airways (BWIA) had to be shut down after it made $139million in losses and only $30million in profit for the years 1996 to 2006.
Albeit, even after the $2.4 billion (US$359.9 million) was forked out to close the balance sheet of BWIA and give the new Caribbean Airlines (CAL) a strong capital injection – the re-engineered airline still struggled with profitability.
Furthermore, the coronavirus’ devastation on the global airline industry brings the future of the airline into question as it has to now borrow US $65million to meet its obligations.
At the press conference on Tuesday, Finance Minister Colm Imbert said, “As you would realise Caribbean Airlines is earning no money at this point in time so that we have secured a US$65 million loan to assist Caribbean airlines—that’s $442 million in TT$.”
In response to the Business Guardian’s questions, CAL confirmed that it was in the last stages of this loan. The airline noted, “The board and management have done a thorough analysis of the financial position. We are also in the process of finalising a loan.”
CAL indicated that it has clear plans in place to safeguard and mitigate any further financial pressures, and it continues to monitor and make adjustments as time passes.
According to the airline, the situation is a dynamic one and this position may change depending on the timeline of resumption of passenger service, which is outside of the airline’s control.
Although the current decision to resume service is outside of the control of the airline, and is at the mercy of the threat of the virus and the government’s mandate to open borders, the company has consistently found itself in situations where the glimmers of hope are snuffed out as soon as they come to the fore.
After the company got over its initial loss of $117.6 million for its first year in operation as CAL, it made a profit of $34.4 million for 2008—greater than any profit BWIA made since 1996, combined (BWIA made profits in 1998, 1999 and 2000 of $9m, $3m and $1m respectively).
Guardian Media understands that one of the reasons for the profitability of Caribbean Airlines subsequent to 2007, can possibly be because the loss making London route was eliminated from the airline’s destination list. The profits of the company continued up until 2009, according to a June 2018 Joint Select Committee report.
However, this profitability was short-lived, as the airline started to record losses in the near-term subsequent periods. According the audited reports of Caribbean Airlines done by KPMG, the company recorded after tax losses from 2011 to 2014 of $313.5 million, 661.5 million, 143.1 million and 150.6 million.
Moreover, on the May 17, 2019, the Finance Minister Imbert noted that the Port-of-Spain to London route was resumed and CAL lost US $36,049,543 or TT $245 million over the period 2012 to 2016.
Finally, CAL re-engineered its Board and management of the company in 2017 and in 2018, the airline recorded 42m in profit. The airline’s Earnings before Interest and Taxes (EBIT) for the nine month period ending September 2019 stood also at $121 million.
In different sittings of Parliament, the government trumpeted the success of CAL, as it climbed out of the pit of perennial loss making. In another sitting on October 15 2019, Imbert also highlighted that for the period September 2015 to March 31, 2019 CAL spent US $12,076,834 on promotions, advertisements, marketing and sponsorship to receive a US $14.2 million return in 2018.
With the acknowledgement of the 2018 profit, the company decided to change its fleet by leasing new aircraft, the Boeing 767 Max 8 – but this was also impeded. The Boeing 767 Max 8, which was not only ordered by CAL, but by airlines all around the world was the subject of multiple investigations as its faults led to crashes and deaths.
In spite of this minor setback, the Prime Minister, Dr Keith Rowley was still poised and excited to give the results of CAL for 2019. Unfortunately the emergence of COVID-19 has the company now repeating its history of struggle.
CAL said that the pandemic has cause them to make changes in operations and inflight service.
The airline said that its post COVID operations would be in accordance with international guidelines and its revised policies will deal with “social distancing at airport check-in, boarding and disembarkation protocols, stowage of carry-on items, seating on board the aircraft, the use of Personal Protective Equipment including the use of masks and gloves, cabin operations and changes to the on board in-flight service” and the use of lavatories.
The airline said, “The focus at this time is to continue to carefully manage costs and ensure customers feel comfortable and safe to travel. Catering is one expense where some savings may be realised.”
With regard to meals still being provided for those customers travelling in economy, CAL said that COVID-19 has impacted its operations in unprecedented ways, and it has had to amend its on board service to minimise the spread of the virus.
It said, “We are currently looking at a few options regarding the meals etc, which will be communicated going forward.” CAL indicated that it is working with its shareholders to mitigate risks and to prepare for the restart of operations as governments will need airlines to be ready to play their role as an economic catalyst in the recovery post COVID-19.
Meanwhile, aviation consultant and former director general of the Civil Aviation Authority, Ramesh Lutchmedial told the BG that the one opportunity he sees for CAL, is for the airline to become the single Caribbean airline.
Lutchmedial said, “Airlines like Suriname Airways and Cayman Island Airways and Bahamas Air and so on, it would be very difficult for them to recover because nobody—none of the countries have the financial resources to give them bailout.”
He noted that this was especially true for LIAT. According to Lutchmedial, the majority of the Caribbean economies that possess their own airline depend on the tourism sector, which has been completely decimated at this time.
Lutchmedial said that the major impediment to the goal of a single Caribbean airline has been “insularity on the part of CARICOM states because everybody wants their own airline, but everybody cannot afford to have their own airline.”