Dennise Williams, Staff Reporter
LAWRENCE
AIR JAMAICA intends to transform itself into a lean airline serving the niche markets of Caribbean and eastern North American travellers, while keeping its Jamaican essence.
Outgoing chairman, Dr. Vincent Lawrence said a new business plan is now complete and is with the Minister of Finance.
"It reflects a net profit from year four onwards and the ability of the airline to meet its commitments and service its debts over the forecast period," he said. The focus will be on offering a reliable, consistent, efficient and on-time service on all routes and Jamaican hospitality from check-in to the final destination.
In a presentation at Air Jamaica's downtown Kingston offices yesterday, Dr. Lawrence announced that a new board and chief executive officer will be disclosed by the Minister of Finance next week and negotiations are underway for the employment of a chief financial officer.
Despite losing US$79 million (J$4.9 billion) in the first eight months of the year, and expected losses of US$15 to US$20 million (J$937.5 to J$1.25 billion) going forward, he said, "Air Jamaica today is far healthier financially and operationally than the Air Jamaica we took control of in December."
FINANCIAL RESTRUCTURING
He said the company had raised US$325 million (J$20 billion) at competitive interest rates since the airline was brought back under state control.
Of this amount US$160 million (J$10 billion) was used to restructure existing bank loans thereby reducing the high debt servicing costs and providing a platform for basic financial security.
The bulk of the remaining US$165 million (J$10.3 billion) is being used to bring our significant trade credit balances in line with industry standards.
This has allowed for continued negotiations for debt forgiveness, more manageable payment schedules and better credit terms.
NETWORK/ROUTE RATIONALISATION
The reconfiguration of the route network to remove unprofitable routes and reduce the frequency of flights on marginal ones is already bearing fruit, he said.
In July, 80 per cent of seat capacity was filled. This was the highest load factor for any single month in five years and in August, "we were not far behind filling 77 per cent of our seat capacity."
September, which is now considered the Hurricane month, has not been good for the Caribbean travel industry but 'reasonable' load factors have been achieved and the numbers will be released shortly.
CREW AND STAFF RESTRUCTURING
Staff remuneration and restructuring have been successfully streamlined, he said.
An agreement has been reached with the pilot body and management remuneration has also been reduced.
Redundancy payments are being made to former employees, and all liabilities with the staff pension fund have been settled. The staff pension fund has been discontinued at a settlement cost of over $400 million.
MAINTENANCE AND ENGINEERING
Negotiations for better aircraft maintenance contracts are advanced while management and new technological systems are being implemented to ensure adequate maintenance and better administration of maintenance contracts.
AIRCRAFT LEASE ARRANGEMENTS
Of the 20 aircraft inherited, four have already been sub-leased or returned to the lessor and negotiations continue on terms for the return of a fifth aircraft.
This leaves a fleet of 15 newly serviced aircraft on which the airline is now current with its payments to all the aircraft lessors.
IMPROVED FUEL MANAGEMENT
There has been a massive increases in fuel prices, he said. "We are preparing to hedge our future fuel prices as soon as market conditions will allow."
The hedge will assist in giving some stability and certainty to pricing arrangements and operational costs.
Through conservation the airline has been able to keep increased fuel operational costs within manageable limits, he said.
COST REDUCTION EXERCISE
The cost reduction exercise, though still below target is progressing. "We have also modified our in-flight service by cutting out hot meals on flights shorter than two hours."
Paper tickets expensive and systems are being put in place to ensure a switch to electronic ticketing. Currently over 75 per cent of tickets issued are electronic.
