GOVERNMENT YESTERDAY gave its clearest indication yet that it is streamlining preparations for the sale of the national airline, Air Jamaica, as well as taking care of the liabilities for which the state will be responsible.

In a statement to Parliament yesterday regarding the privatisation of the airline, Prime Minister Bruce Golding said the Government would be making a provision of $27 billion in its next Budget to cover its costs for transferring responsibilities for Air Jamaica.

Golding told members of the House of Representatives that Government had no intention of providing any financial support to Air Jamaica beyond March 31.

He stressed, however, that the Government remained hopeful of securing arrangements for the airline's privatisation before the start of the 2010-2011 financial year.

"If not, the arrangements for its closure would be triggered by the first of April, which means that the necessary notices would be served, and the funds provided in the Budget will be dedicated to winding it up as quickly as possible. I hope we will be able to avert that," the prime minister said.

March 31 target

Regarding the ongoing negotiations with Caribbean Airlines for the sale of the cash-strapped Air Jamaica, Golding said these were well advanced, as a non-binding letter of intent had been signed with the target for completion by March 31.

He also told the House he would report the outcome of the current negotiations with Caribbean Airlines at a later date.

Golding also revealed that the airline would be selling the two aeroplanes it owns to cover outstanding taxes owed to the United States Internal Revenue Service (IRS), as well as the United States Department of Agriculture.

Six other aeroplanes are currently in service with the airline.

"We owe a lot of money. We have had to use diplomatic channels to avoid our planes being seized for non-payment of fees owed to the US government, the IRS in particular," said Golding.

Additionally, the airline is currently in negotiations for the sale of the five floors it occupies on its Harbour Street building in downtown Kingston.

Proceeds of this sale will be used to help continue operations over the next few months until a decision is made.

Golding noted it was made clear in the negotiations that the Air Jamaica brand was not for sale, as this would be retained by the Government.

In addition to keeping the name Air Jamaica, Government will also retain its popular Fort Lauderdale, New York, Philadelphia, Toronto and Baltimore destinations.

Redundancy payments

He said that of the J$27 billion being earmarked for Government to pay its creditors, US$25 million (about J$2.2 billion) of this figure was being set aside for redundancy payments.

"The Government understands the emotions that are aroused in determining the future of Air Jamaica," Golding said. "All of us share the pride that those colourful aeroplanes evoke, whether we are seated in one of them or watching from the ground as they soar to their wuthering heights. But that pride has come at a huge cost ... and it has helped to deprive us of the pride we should have been able to have in seeing our children go to good schools and the sick to good health facilities. We have to get our priorities right!"

The prime minister said that, since its inception in 1969, Air Jamaica has accumulated losses of J$126 billion, including losses of J$31 billion over the last three years.

philip.hamilton@gleanerjm.com

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