Al Edwards, Financial Editor
Air J chairman, Dr. Vin Lawrence
THE NATIONAL carrier Air Jamaica has settled a law suit filed against it for US $2.1 million (J$128 million) in outstanding fees for services provided by Florida-based advertising firm, Hunter Hammersmith, Wednesday Business understands.
The US advertising agency was formed in 1987 by Cheryl Hamersmith and Tracey Hunter and has handled the Air Jamaica account for the last ten years and enjoyed a good relationship with the Jamaican airline.
"Ten years ago when Butch Stewart took over the airline we were given the mandate to turn it into a first world carrier. It was perceived as drab, unreliable and did not capture the imagination of the public. We totally redesigned both the interior and exterior of the planes, coming up with the phrase 'Soaring to new heights.' We introduced red carpet and champagne flights and refitted and revamped check-in and gateway points. The idea was to make passengers feel special," said an insider at the advertising agency, speaking under anonymity.
Both the agency and the airline won a host of awards for hospitality and the look of the planes and in 1995, Mr. Stewart won the prestigious marketer of the year award. It was felt that Air Jamaica was put on the right footing to turn the corner and effectively compete with other carriers
Hunter Hamersmith also handled advertising accounts for the hotel chain Sandals and says it had no problems getting paid on time and thought this would also apply to Air Jamaica but recently the airline has been late in paying its bills.
At the end of last year Air Jamaica once again came under Government control and under the leadership of Dr. Vin Lawrence it is now looking to put the carrier on a sound footing and return it to profitability.
Unaudited accounts for Air Jamaica for last year reveal it incurred a loss of around US$76.5 million (J$4.7 billion). Before privatisation it was running at a loss of US$140 million. Dr. Vin Lawrence, as executive chairman, declared earlier this year that Air Jamaica losses over the last ten years stand at US$837 million (J$5.1 billion).
The source continued, "Air Jamaica owed [Hunter Hammer-smith] US$2.1 million (J$130 million) for five months work with 90 per cent of that total comprising of media costs. It did make an initial payment of US$200,000 (J$12.4 million). " In February this year the advertising agency sued Air Jamaica for the outstanding US$2 million.
Wednesday Business understands that chief restructuring officer (CRO) of the airline, Aubyn Hill, who met with the ad agency, indicated that the airline was experiencing financial difficulties and that it needed more time to make good on the fees owed. While the airline has paid up some of its debts, there is till some dispute about a balance of US$160,000 (almost J$10 million) for bill board advertising. The agency has terminated the agreement.
A source at Air Jamaica responded: " We have paid around US$1.7 million (J$105 million) which is the vast majority of what we owe. For the rest of it there is some dispute and we have requested documentation from Hunter Hamersmith. It is now up to them to provide the necessary information."
