CAL flies into a storm

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In the face of the staggering losses faced by Caribbean Airlines over the last 18 months, the government, as majority shareholder in the airline, must press for a realistic strategic plan over the coming months.

Clearly adjustments had to be made. The business has largely been grounded during the pandemic, unable to do much beyond sporadic repatriation flights and some cargo business, which is at best, a sideline for the company.

The result was a loss of US$103 million in 2020 and $172 million in losses for the first quarter of 2021.

In June, the airline announced it was retrenching 450 workers at a cost of $110 million and streamlining its fleet from 19 aircraft to 13.

This followed strategic but temporary layoffs, furloughs and salary cuts that began in October 2020, which ultimately proved inadequate to the challenge the airline faces.

Armchair opinions are flying hard and fast on the matter.

Newsday reader John Jessamy called for the airline to sever connections with Jamaica in a letter to the editor last week.

UNC Senator Damian Lyder wondered on a party podium why employees are being terminated when they will be needed for any post-pandemic surge in tourism.

The biggest problem will be the demand on a cash-strapped government looking to cut subsidies while continuing to sustain the airline after it hit this operational and financial wall.

A complete reopening of the borders – that is, to tourists as well as returning nationals – won’t bring a flood of business to the airline in the near term. This country’s tourism has always lagged behind that of much of the rest of the region, and reopening months after other islands will not improve matters.

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Despite a recent promotion from CAL declaring the airline “Ready to Fly,” recovery will be cautious and tentative for even the most popular destinations and much of TT’s air travel is business-related, which is likely to take a hit in a Zoom-enabled world.

The challenge for CAL is the challenge that faced its predecessor BWIA’s profitability.

When the government closed BWIA in 2006, it intended to reconfigure the airline as a profitable transportation service. As it turned out, CAL achieved one year of profit, in 2019, ironically on the eve of the pandemic that shut down international air travel.

The local airline is hardly alone in its troubles. LIAT went into administration for bankruptcy protection in July 2020 after Antigua and Barbuda undertook the rescue of the beleaguered airline. More than 667 LIAT staff have been retrenched, with more to go as the airline rationalises its operations.

The decision to reduce CAL’s staff and fleet may foreshadow a fundamental reassessment of its role. The hard reality is that jaunty announcements of its readiness to transport passengers are not enough. The airline must plan for an incremental recovery and to survive in the long run, must be ready to make major, reality-based changes to its business model. — Trinidad NEWSDAY

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