Up Front
Who Will Run CAL?
A major change in the portfolio responsibilityfor Cayman Airways Limited (CAL) may be in the offing as one ofthe first orders of business for the new government, informedsources have indicated to Cayman Net News.
It is understood that the Cayman Islands' national flag carrieris likely to be removed from direct political control, where forthe most part it has fallen under the charge of elected ExecutiveCouncil members, and assigned to the Financial Secretary.
It would not be the first time that CAL would be chaired by aFinancial Secretary. From 1971 to 1977, it was chaired by thenFinancial Secretary, Sir Vassel Johnson, who was also the airline'sChairman from 1984-1985, as an elected member of Executive Council.
In the last administration, Leader of Government, Mr. Truman Bodden,handled portfolio responsibility for the airline.
It will not be until early next week before an official announcementis made regarding the assignment of the various portfolios tothe elected and official Executive Council members.
Commenting on the possibility of CAL being assigned to the FinancialSecretary, a high-level government source noted that such a movecould pose a difficulty for the Treasury due to the level of increasein subsidy that would be required to make the airline viable.Government now subsidizes CAL to the tune of approximately $4million annually.
It would require a threefold increase to ensure viability, thesource said.
Another reliable source, a former board member of Cayman Airways,when asked to comment noted that CAL, as a separate company hasalways been under one of the ministers. He questioned whetherconsideration to change that was a "ducking of responsibility"by the new administration, because it is "too much of a hotpotato."
"I don't think it would be fair to the Financial Secretary,"he added.
Options to consider for the profitable operation of the airlineshould include scaling back its operations and giving the CaymanBrac route to Island Air - the privately-owned domestic airlinethat provides passenger and cargo service among the three islands-- the source noted. He noted that with an imperative to bringpublic finances under control, government could hardly affordto double the subsidy.
Cayman Airways provides non-stop jet service between Houston ,Miami, Tampa, Orlando and Grand Cayman, with connecting serviceto Cayman Brac and Jamaica.
According a recent CAL release, its audited financial statementsfor 1999 showed a year-end net loss of US $80,463 after subsidy,compared with a net profit of US $201,972 in 1998.
At the end of 1999 CAL had assets of US $35,439,832 compared toliabilities of US $29,249,908, "a milestone since the precarioustimes during the late 1980s and the period 1990-1992 when contingentliabilities alone exceeded US $105 million and losses topped US$14 million in one year," the release stated.
During the 1999 fiscal year, two airplanes previously owned bythe government leasing companies were transferred to Cayman AirwaysLimited by merging the leasing companies into CAL, thus makingCAL owner of the assets it was paying for.
"It may be in the interest of CAL to look for a partner,"the airline's former board member said, though noting that itshould not be divested completely. He said that with increasedcompetition with flights in December out of New York, the airline'saccumulated loss for 2001 could be double that of the 2000 figure,which he said could be between $3-$4 million, after subsidy.
Approximately 300 persons are employed to Cayman Airways.