(Trinidad Express) Caribbean Airlines Ltd (CAL) narrowly averted having 11 of its aircraft seized by hurriedly securing a US$50 million (TT$320 million) loan from First Citizens bank to cover outstanding arrears owed to the International Lease Finance Corporation (ILFC).
This claim has been made by fired CAL chief financial officer Shiva Ramnarine in a report dated August 20, 2013, to Finance Minister Larry Howai and Minister in the Ministry, Vasant Bharath.
The ILFC is CAL’s largest lease provider.
According to Ramnarine’s report, the near catastrophe that was kept quiet occurred in March this year when ILFC served a notice of default on CAL demanding payment or stop flying the 11 Boeing 767-800 aircraft.
Seizure of the aircraft would have led to chaos and cancellation of flights as the 11 Boeing 767-800 make up a major part of the airline’s fleet.
Checks on CAL’s website show the airline’s fleet is made up of 15 Boeing 767-800, five ATRs 72-600 and two Boeing 767-300 ER.
The Express understands it was Ramnarine, (who was terminated on August 4 this year after it was alleged he acted contrary to proper procedures) who negotiated with ILFC head Jorge Garcia to settle outstanding payments. As a result the default notice was quietly withdrawn.
The Express learned it was also agreed that the default notice would not have been brought to the attention of the T&T Civil Aviation Authority (TTCAA) after discussions between Ramnarine and Jorge.
And while CAL last Saturday denied any knowledge of the notice of default, a copy of the document dated March 15, 2013 obtained by the Express shows that the total amount that was due and owing under the 28255 lease was US$252,923.48.
The notice also listed the sum of US$1,889,531.05 as being owed under leases 28233, 28234, 28235 and 28246.
Details of CAL’s near catastrophe are also revealed in a March 21, 2013 e-mail sent from Ramnarine to former acting chief executive officer (CEO) Robert Corbie and then chairman Rabindra Moonan who was subsequently fired. Excerpts from the e-mail obtained by the Express stated: “I was served a notice of default and demand for payment indicating seizure of all 11 aircrafts (sic). However, Jorge retracted the notice after I spoke at length of our plan and our intentions to transform CAL. It should also be noted that Jorge agrees with our position of stabilisation and transformation which includes reducing frequencies and as such our position to not acquire a 767 at this time.
“Jorge on behalf of ILFC and in the spirit of business partnering will negotiate with us to take back aircrafts (sic) if needed as we reduce frequency. As he indicated, the survival of CAL is important to ILFC as a result of our business and history together.
“He assured me that he will not be informing the TTCAA of the notice now that it has been retracted.”
In the e-mail, Ramnarine also disclosed that ILFC questioned the rationale behind the purchase of an aircraft from China. He said: “One area he (Jorge) articulated as a sore point was CAL’s counter-intuitive position of stabilisation and transformation but purchasing an aircraft from China at two times the price. “At the loaded cost of the Chinese aircraft ($31m) ILFC could have sold two aircrafts (sic) to CAL for that price.”
Also discussed at the four-hour long meeting was cost reductions and business practices, Ramnarine said.In response to the e-mail, Moonan on March 22 wrote: “Well done.”
But while Ramnarine was commended for avoiding an embarrassing situation, the interim CAL board, appointed by Howai, listed the handling of the matter as one of the issues for terminating him during his probationary period. Ramnarine was terminated following a report compiled by acting CEO Capt Jagmohan Singh, vice-president of human resources Charmaine Heslop Da Costa, corporate secretary Nalini Lalla and board director Patricia Kong Ting.
The report stated: “Shiva efforts on this front would have been offset by a recommendation which he fully supported of the leasing of a third 767 aircraft in exchange for one 737 by the lease company. In this regard, Shiva failed to support this recommendation with the financial justification. He also verbally represented to the chairman at this time that it would have been detrimental to the ILFC relationship if the lease was not signed because of previous late payments on the company’s lease commitment.
“Shiva further represented that the decision to lease a plane was within the authority of management of the company. The latter assertion was incorrect as only the board has the authority to make decisions on lease or purchase of airplanes. Also, the negative fallout of the late payment was eventually managed without the lease of the plane recommended.”
The report also listed several alleged shortcomings on the part of Ramnarine in relation to decision making and handling of matters relating to CAL. Some four-months after Ramnarine was sent packing, the Express learned that his termination is not sitting well with Bharath.
