Attempts made to block Air J sale for personal gain
Sunday, September 20, 2009
The Government's efforts to divest Air Jamaica were being undermined by some people within the administration who fear the sale will deprive them of personal benefits, a highly placed source has informed the Sunday Observer.
The sabotage had got so bad that Prime Minister Bruce Golding had to step in to protect the divestment process from being harmed by unnecessary delays, said the source.
At the same time, Air Jamaica president Bruce Nobles yesterday said the divestment discussions were being conducted with one "investor group" which, he emphasised, was not an airline.
"There's no plan to sell to Spirit," he said in reference to a media report two months ago stating that Air Jamaica had been sold to Spirit Airlines owners Indigo Partners and Oaktree Capital.
"There's one investor group on the table right now," said Nobles.
Nobles declined to name the investor group, neither did he give details of the talks. However, yesterday, a Government official close to the negotiations blasted the people in the administration who had sought to block the sale.
"They haven't grasped the importance of the divestment," said the official who asked not to be named. "If the airline is not sold by October the Government will most likely have to lock it down."
The people opposed to the sale, he said, would delay giving information to the potential investors and engaged in a campaign of bad-mouthing the divestment.
"These are people who, because of their position, got free flights on the airline," said the official.
The original March 2009 deadline for privatising Air Jamaica was extended to June 30.
Although Air Jamaica has seen a slight increase in revenues last year, the national carrier has been reporting losses of over US$150 million per annum.
In July, Don Wehby, who was seconded from GraceKennedy to the finance ministry and given the divestment of Air Jamaica as one of his responsibilities, said that the improvement in the financial and operational results of the airline had helped the sale process and increased investor interest in the airline.
He said that the Air Jamaica Privatisation Committee - assisted by expert input from the International Finance Corporation, the private sector arm of the World Bank Group, and which has a record of over 150 successful assignments in 60 countries - had negotiated strategically with the two top investor prospects at the time and had made a final recommendation for the signing of a document of agreed terms with one party. The terms include a provision for the Government to maintain a minority equity stake in the airline.
Yesterday, the official - emphasising the need to relieve the country of the cost of operating Air Jamaica - said that the airline could not sustain another period of losses.
The delay in the sale, he pointed out, has aggravated a number of factors that could make the prospect of buying the carrier a bit unattractive. Among them are that fuel prices trended up since the time Air Jamaica was put up for divestment. High lease agreements, a large staff compliment and the route cuts made earlier by Air Jamaica are also said to be concerns raised during the talks.
"Right now it's 50-50," said the official in reference to the divestment. "It's not a done deal."