The official yesterday disclosed that the request for an executive jet service came through the corporation sole of the state-owned airline, which is the Ministry of Finance. The official further disclosed that CA had not been approached to offer an executive jet until recent months.
The official questioned the need for the Government to initiate an executive jet service, noting that this was the deeper issue in the ongoing controversy over reported plans for the Government to acquire a Bombardier jet via the fledgling airline which was set up to replace the cash-strapped BWIA.
The official further said while CA had in its first year met its financial and customer service targets, the company is unlikely to make a profit for its first accounting year.
This is due to the high restructuring costs it has incurred thus far. Yesterday, another high-ranking airline official noted that the idea of initiating an executive jet service was never considered as a plausible business venture for BWIA, CA’s predecessor.
“Never has there been any suggestion that we should go into the jet business,” he said.
He hit out at the Government’s reported plan to enter into an arrangement with CA to provide a executive jet service, saying it was an attempt to hide the true nature of the transaction.
“This is a straight gift,” he claimed, “Government was just looking for a way to get a jet.” Yet another CA board room source denied the company had made a down payment in the amount of $65 million for a Bombardier jet. But the source, however, would neither confirm nor deny whether or not any money was paid. The source also clammed up when asked about reports that the board of CA was in disagreement over plans to begin an executive jet service for the Government.
The current members of the CAL board are: Arthur Lok Jack, the CA chairman; Gervase Warner, an executive director of Neal & Massy; Robert Riley, the chairman and CEO of bpTT; Shafeek Sultan Khan, an attorney and consultant.
The financial position of CA has not yet been published. But on March 20 last year the company took out a mortgage for an unspecified sum from the National Westminster Bank, plc, based at Bishopgate, London. The mortgage is for, “an asset owned by the company out of the jurisdiction” and involves payments being made to the Royal Bank of Scotland plc. But CA sources yesterday called the mortgage, “a standard transaction” unrelated to any jet purchase.
CA is the successor to BWIA which ended its operations on December 31, 2006.
BWIA was, throughout its history, a cash-strapped airline, plagued with losses and had a history of government injections. For instance in November 2002 the company received a $86 million bail-out. That same year the Airports Authority claimed BWIA owed a debt of $29 million to it. In 2005, the company racked up a loss of $164 million and up to September 2006 had racked up further losses of $50 million. By the time CA was eventually formed on September 26, 2006, $1.6 billion had to be set aside for the payment of BWIA’s creditors and for its severance packages.
Approximately $535 million was set aside to fund the new entity’s operations. A $14 million payout in gratuities for former flight attendants was approved by the Cabinet in October.
Yesterday, industry insiders described the jet business as “very expensive” with one questioning why Bombardier was chosen by CA, when there are cheaper options such as NetJet, an American jet c o m p a n y that offers fractional jet ownership.