Former chairman says Caribbean Airlines had money in the bank in 2010

 

Now, only two years later, the airline which replaced its failed predecessor BWIA in January 2007, is reporting an unaudited loss of US$52.8 million (TT$339.5 million) for 2011.

Former CAL chairman Arthur Lok Jack recalled yesterday that when he and his board of directors resigned in June 2010 (following the May 24 general elections and change of government), the airline was in a healthy cash position and was without debt.

Now the airline’s accounts are bleeding red, with its subsidiary Air Jamaica airline also saddled with a loss for 2011 of US$38.1 million (TT$245.2 million).

The airline’s financial position was detailed by Finance Minister Winston Dookeran in the House of Representatives in Port of Spain on May 4.

Last year former CAL chairman George Nicholas declared a $200 million profit at the airline.

It was later suggested by Transport Minister Devant Maharaj that this figure was arrived at after looking at unaudited cash flows at the airline.

On May 5, Maharaj told reporters at an event at the Vehicle Management Corporation at Beetham that his People’s Partnership Government met a significant amount of debts in a number of State agencies (including CAL) incurred by the former PNM administration.

Yesterday, a visibly upset Lok Jack told the Express in an exclusive interview at his Associated Brands Industries Ltd offices in Barataria that he, and the other former board members, needed to clarify the financial state of CAL when they gave up their directors positions in June 2010.

He said the previous board- which included energy executive Robert Riley, Neal & Massy executive Gervase Warner, industrial relations expert Shafeek Sultan-Khan and finance expert William Lucie-Smith (who resigned before 2010) had refrained from previously speaking about CAL’s performance but believed it was necessary to correct certain statements now.

The Lok Jack-led board of directors was installed in 2007 when CAL was formed.

“When we resigned in 2010, there was US$140 million in cash in CAL’s fixed deposits,” Lok Jack.

The Express was shown both unaudited and audited financial statements for the airline which indicated CAL’s cash reserves at various financial institutions.

For instance, CAL had US$48 million at Citibank, US$30 million in First Citizens, US$22 million in FirstCaribbean International Bank, US$29 million in the Unit Trust Corporation, US$11 million in Guardian Asset Management, US$21 million in RBTT, US$3 million in Roytrin and US$4 million in Venezuela’s Banco Mercantil.

Lok Jack said when he and his directors resigned, they submitted a substantial dossier to Corporation Sole and Finance Minister Winston Dookeran, detailing the airline’s healthy cash position.

In their joint resignation letter, the directors said its was “imperative that every effort be made to secure the beneficial position which the airline now enjoys and ensure that it is not put at risk through inaction or errors of judgment”.

The resignation letter pointed out that the directors were leaving CAL in a “strong competitive position, and in a healthy cash position with no debt”.

In last Sunday’s Express, former chairman Nicholas in a statement said the board he inherited had not filed financials for a considerable period and left many bills unpaid, saying it was something that was ignored at the expense of making political and personal jibes.

Lok Jack defended the performance of his board yesterday, saying, “Nothing could be further from the truth. There were audited accounts for 2007, 2008 and at the time we demitted office (June 2010,) the audited accounts for 2009 were being completed.

“Each month, financials were prepared on a monthly and year-to-date basis in addition, every quarter these financials were reviewed by the Audit Committee of the board. So to say “the board he inherited had not filed financials for a considerable period…” is completely false.”

Lok Jack said his directors had come up with a plan to purchase four turbo prop aircraft to replace CAL’s aging fleet of Dash-8 aircraft for use on the Tobago airbridge route as well as for short range flights to nearby islands.

He said this would be done without using CAL’s cash as financing arrangements were being put in place through international financial institutions in France and Italy.

Aviation industry sources familiar with CAL’s operations told the Express yesterday that CAL in 2011 paid downpayments up front for new ATR aircraft from France using its own cash and also spent some of its own money on the issues related to the Air Jamaica merger.

Leave a Reply

error: Content is protected !!