Air Jamaica Outlines Wet-Lease Plans
Mar 8, 2010
By Darren Shannon
Air Jamaica CEO Bruce Nobles is proposing a strategy that could terminate the carrier’s scheduled operations on April 11 and revive the company the next day as a wet-lease operator for Caribbean Airlines, which is still embroiled in takeover talks with the Jamaican government.
In an interview with The DAILY, Nobles said the plan is still under negotiation and many key details have still to be agreed.
Despite that, an outline has emerged where Air Jamaica will effectively cease to exist on April 11 just as its winter schedule ends, and all employees will be made redundant.
Nobles explained that an unspecified number of these employees will be rehired on fixed-term contracts to operate six aircraft under contract to Caribbean Airlines on a schedule announced early last month (DAILY, Feb. 3) that drops five city-pairs and three narrowbodies from Air Jamaica’s current network.
“We will be using our fleet, our AOC [air operator certificate], and our bilateral agreements. We will be operating under the Air Jamaica code, issuing the same tickets, and taking bookings through Air Jamaica’s reservation systems,” said Nobles in the telephone interview.
He added that this contracted operation will exist for six to 12 months, while Caribbean Airlines finalizes the creation of a Jamaican subsidiary and obtain the relevant access rights from U.S. authorities.
The Trinidad and Tobago-based carrier, however, will be financially exposed to the wet-lease operation. “If the expenses are larger than the revenue, then Caribbean will have to make up the difference. Conversely, if there is a profit, that will be Caribbean’s,” said Nobles.
But this is only an outline, warned Nobles, who noted that key elements, including the implementation date, can change. “There are accounting issues with ending an operation in the middle of the month, and although it is too early to say, this could affect the date.”
It is also unclear if the new operation will retain Air Jamaica’s tails or convert to Caribbean Airlines’ livery, and the future of this mostly leased fleet is still uncertain.
“What we want to make clear is that we are working to guarantee a seamless transition from one operation to another that ensures our customers will not be inconvenienced, and retains airlift to Jamaica,” said Nobles.
And though the CEO avoided the issue, this agreement also relieves a near-bankrupt Jamaican government of an expensive nationalized company that is hindering the completion of a major loan agreement with the International Monetary Fund.
Source: Aviation Week