(Trinidad Express) A total of $1.8 billion! That’s how much Caribbean Airlines will get in support from the Government during the period 2013 and 2015, according to the figures revealed at yesterday’s meeting of the Standing Finance Committee in the Parliament.
However, Finance Minister Larry Howai stated that the CAL management had informed him that the company expects to break-even in three years time. He said however that Government would have to provide funds for CAL in 2015, 2016 and 2017.
Opposition Leader Dr Keith Rowley said CAL received $477 million in support in 2013, $570 million in 2014 and was estimated to receive $718 million. Diego Martin North East MP Colm Imbert later pointed out that in 2015, Government was really providing $730 million, following the Minister of Finance’s disclosure that Government would be allocating an additional $11.3 million to CAL to assist it with debt repayment.
Rowley noted that there was a provision for an equity injection of $318.3 million in 2014. He asked when this injection took place and why was it not made public. Rowley said how was Government going to deal with this support of $2.1 billion to CAL.
The Minister of Finance said a restructuring plan had been put in place which would lead to the gradual reduction of the subsidy over the next three years. He said however the airline would not reach a level of sustainability within the next three years. Howai said a big part of the subsidy arose from two issues “which are endemic to the airline”—the fuel subsidy which was approximately US$50 million and the subsidy to the Tobago airbridge was US$26 million, which totalled approximately US$78 million or TT$400 million.
He said the airline also incurred a loss on the Venezuela route as a result of the devaluation of the bolivar. “This was further impacted by the fact that you cannot get funds out of Venezuela at this point in time. So the monies to pay for that Venezuela route has been tied up and has further tightened the cash flows of Caribbean Airlines. That figure is US$45 million,” he said. He said some losses came from the integration of Air Jamaica.
Rowley then asked for a proper breakdown of the $730 million. He said “throwing in the Tobago losses, which was an essential service” could confuse people. He asked whether the Minister was prepared to state what were the losses on the London route and losses on any other route. Rowley also asked what was the basis of the Minister’s acceptance of the management’s position that the airline would break even in three years when the trend did not support this. Imbert noted that outside of the Tobago subsidy and the fuel subsidy, $320 million was being provided in support to CAL in 2015. Imbert also noted that Government was providing $194.7 million to First Citizens Bank for restructuring. Howai said this was arrears of interest payment, which Government had not paid for the past five years, to the State-owned bank. He said there was no payment on the principal and government had allocated a further $92 million to be paid to FCB in 2015, bringing the total amount to be paid by Government to FCB in 2015 to $280 million.
Both Rowley and Imbert also pointed to the decrease in salaries to the Financial Intelligence Agency (FIU), saying that the FIU’s workload and increase in surveillance should have warranted an increase in staff. However, Howai pointed out that there was an increase in the contract employment in this agency (from $12 million in 2014 to $15.9 million in 2015).
