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<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD><SPAN class=TopStory>Cabinet rejects Air J's new business plan</SPAN>
<SPAN class=Subheadline>. But promises to keep airline flying</SPAN></TD></TR><TR><TD>BALFORD HENRY, Observer staff reporter
Thursday, November 02, 2006
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<P class=StoryText align=justify>THE government promised yesterday to keep Air Jamaica flying, at least for the time being, but sent the airline's executives scurrying back to the drawing board to devise a new business plan around its US$30-million subsidy.<P class=StoryText align=justify>"What we have said is that, yes, we are committed to the airline continuing to operate, but you have to operate within the commitment of government to support you with an amount not exceeding (US$30 million)," Minister of Information and Development Donald Buchanan told yesterday's weekly post-Cabinet press briefing at Jamaica House.<P class=StoryText align=justify>Buchanan was again reluctant to give any detail of the proposals from the airline, despite a commitment at last week's briefing to reveal more information. He was also cagey about the recommendations of a Cabinet sub-committee, chaired by Minister of Finance and Planning Dr Omar Davies, which was assigned to review Air Jamaica's business plan proposals last week Monday.<P class=StoryText align=justify>The sub-committee's review, which led to the normal meeting of the Cabinet on Monday being postponed to yesterday, substantially supported the position of the Cabinet last week, that it could not accommodate the proposed plan.<P class=StoryText align=justify>Buchanan gave details of only one recommendation from the sub-committee, which was accepted by the Cabinet, which was that "the airline should not, at this time, be closed down".<P class=StoryText align=justify>He said that the sub-committee, however, recommended that the airline formulate a new business plan with provisions to downsize its operations, including eliminating unprofitable routes and provisions for "refleeting", by looking at options for current leases and sub-leases and possible renegotiating the lease contracts.<P class=StoryText align=justify>"One of the things that is going to be central to the whole decision, which will eventually be made in respect of Air Jamaica, is to minimise and bring to as close as possible, if not to the actual amount (of US$30 million annually) which government has committed, as the amount (needed) to support the airline," Buchanan said. He did not give any timetable for a new plan.<P class=StoryText align=justify>He said that the issue of merging the airline with other regional airlines was not considered by the Cabinet.<P class=StoryText align=justify>Air Jamaica's losses for 2006 were estimated at US$85 million at the end of June. Airline sources have said that, for 2005, the company lost US$136 million, US$46 million more than was projected by former chairman Dr Vin Lawrence.<P class=StoryText align=justify>This year, Air Jamaica is projected to lose a total of US$175 million, raising concerns about whether the Government should continue to fund its gargantuan appetite for funds.
However, when asked yesterday for a confirmation of the loss figures, Buchanan said that they were not available.
<SPAN class=Subheadline>. But promises to keep airline flying</SPAN></TD></TR><TR><TD>BALFORD HENRY, Observer staff reporter
Thursday, November 02, 2006
</TD></TR></TBODY></TABLE>
<P class=StoryText align=justify>THE government promised yesterday to keep Air Jamaica flying, at least for the time being, but sent the airline's executives scurrying back to the drawing board to devise a new business plan around its US$30-million subsidy.<P class=StoryText align=justify>"What we have said is that, yes, we are committed to the airline continuing to operate, but you have to operate within the commitment of government to support you with an amount not exceeding (US$30 million)," Minister of Information and Development Donald Buchanan told yesterday's weekly post-Cabinet press briefing at Jamaica House.<P class=StoryText align=justify>Buchanan was again reluctant to give any detail of the proposals from the airline, despite a commitment at last week's briefing to reveal more information. He was also cagey about the recommendations of a Cabinet sub-committee, chaired by Minister of Finance and Planning Dr Omar Davies, which was assigned to review Air Jamaica's business plan proposals last week Monday.<P class=StoryText align=justify>The sub-committee's review, which led to the normal meeting of the Cabinet on Monday being postponed to yesterday, substantially supported the position of the Cabinet last week, that it could not accommodate the proposed plan.<P class=StoryText align=justify>Buchanan gave details of only one recommendation from the sub-committee, which was accepted by the Cabinet, which was that "the airline should not, at this time, be closed down".<P class=StoryText align=justify>He said that the sub-committee, however, recommended that the airline formulate a new business plan with provisions to downsize its operations, including eliminating unprofitable routes and provisions for "refleeting", by looking at options for current leases and sub-leases and possible renegotiating the lease contracts.<P class=StoryText align=justify>"One of the things that is going to be central to the whole decision, which will eventually be made in respect of Air Jamaica, is to minimise and bring to as close as possible, if not to the actual amount (of US$30 million annually) which government has committed, as the amount (needed) to support the airline," Buchanan said. He did not give any timetable for a new plan.<P class=StoryText align=justify>He said that the issue of merging the airline with other regional airlines was not considered by the Cabinet.<P class=StoryText align=justify>Air Jamaica's losses for 2006 were estimated at US$85 million at the end of June. Airline sources have said that, for 2005, the company lost US$136 million, US$46 million more than was projected by former chairman Dr Vin Lawrence.<P class=StoryText align=justify>This year, Air Jamaica is projected to lose a total of US$175 million, raising concerns about whether the Government should continue to fund its gargantuan appetite for funds.
However, when asked yesterday for a confirmation of the loss figures, Buchanan said that they were not available.