Ashford W. Meikle, Business Reporter

Fleet technician, Austin Ferguson, making his presentation to the Special Select Committee on Air Jamaica at the Ministry of Finance in Kingston, on Wednesday - Rudolph Brown/Chief Photographer

Maintenance techni-cians employed by Air Jamaica say the airline should reconsider its proposal to replace its current Airbus system with 14 Boeing 737-300 airplanes, warning it would boost the loss-making airline's operating expenses by $1.1 billion.

But AirJ executives immediately dismissed the claim, saying the technicians were being influenced by Airbus.

The plan being sold by Air J CEO, Mike Conway, and chairman, OK Melhado, is meant to plug at least 50 per cent of the US$100 million ($6.7 billion) that the airlines haemorr-hages annually.

"Air Jamaica is fully integrated in the Airbus system since 2001," said technician Austin Ferguson at a meeting of the special select committee appointed to examine the financial and operational state of Air Jamaica. "The switch to a Boeing 'classic' fleet means introduction costs of up to US$16 million and recurrent yearly cost of another US$4 million."

The airline lost US$120 milllion in 2005, pushing its accumulated deficit over a decade to US$953 million.

At December 2005, Air Jamaica's current liabilities exceeded current assets by US$92 million, its latest accounts show, prompting comment from auditors Mair Russell that: "Continuation as a going concern is dependent on continued shareholder support, obtaining the necessary funding and future profitable operations."

AirJ's management and board has crafted a new business and rescue plan for the airline that requires strong government subsidy. The plan has not been made public, but Cabinet following a review of it last year, demanded that AirJ justify the level of support it has requested in bipartisan talks led by finance minister Dr Omar Davies.

The airline plans to use the 737-300 aircrafts on all but two routes - London, the United Kingdom capital, and Los Angeles (LA), California in the United States.

Ferguson noted that the limited range of the 737-300 prevents it from flying longer than 1,400 nautical miles - to destinations such as LA, Ontario and New York.

"The lower seating of the Boeing fleet," he said "represents a loss in revenue of over US$5 million per year."

The aircraft's lack of range, he added, "would force Air Jamaica to introduce more 757-200s to maintain the formal schedule."

The technicians suggest that if the airline wants to reduce its operating costs, it should lease cheaper A320 and A321 aircrafts since flying a 757-200 on the routes served by the by the A321 would cost only $74,000 per month more per aircraft.

"A new Airbus fleet with lower lease rates could account for US$21 million savings in direct operating costs (compared to) the Boeing Fleet. This could add up to US$31 million if more 757-200 should be needed to cover the 737-300's lack of range."

However, Conway disputed the technicians' report, saying it was based on information supplied by Airbus.

"We certainly have the data provided by Airbus; we also have the data provided by Boeing. Certainly each one of those entities will bias the information to what makes them look good," he remarked to the committee.

Conway has said in the past that of the 14 new fleet, six were five per cent less fuel-efficient and eight had a fuel efficiency of more than 15 per cent.

Air Jamaica's pilots, represented by the Jamaican Airline Pilots' Association (JALPA), in their presentation to the committee, said they could not take a definitive position on the plans to acquire the new fleet since they were unaware of the airline's reorganisation plans.

"We are not in possession of a copy of the company's proposed business plan. As we are unable to give a comprehensive analysis of the strategy being pursued," JALPA said in a prepared statement, a marked departure from the concerns they raised in three letters to Conway last November.

Then they raised questions about the new fleet being acquired, the long-term implications on savings for the company as well training for the association's pilots.

Still, JALPA acknowledged that, based on its observation and experience, "Air Jamaica has need of an aircraft with the capability of carrying a full load of passengers with all the checked baggage and cargo. One of the aircraft being considered has this capability."

ashford.meikle@gleanerjm.com