Progress Report on Search for Strategic Air Jamaica Investor

2/4/2009

Min. Don Wehby Gives Progress Report on Search for Strategic Air Jamaica Investor

The Air Jamaica Privatization Committee has confirmed that, as at January 31, 2009 the team was in serious discussion with a total of three (3) prospective investors in the airline industry – with the prospects coming from three different geographic regions.

Senator the Hon. Don Wehby, Minister without Portfolio in the Ministry of Finance, who provided the update, emphasized that the Government remains fully focused on attracting serious investors within the deadline already set for the privatization – that is, by March 31, 2009.  “This is the deadline toward which we are all working and we believe that it can be met,” he added.

He said the Privatization team was required by non-disclosure agreements, which all three investors and the Government have signed, to keep the negotiations confidential.  However, once the winning investor is selected, the Government will undertake the appropriate process to communicate on the main terms of the agreement reached, Senator Wehby said.

Minister Wehby remains firmly of the view that the privatization of Air Jamaica, coupled with requirements for the Strategic investor to recapitalize the company and keep the brand, is a better option than keeping the airline as a line item on the national budget.  “Trying to keep it could result in a forced closure because of the lack of funds to carry the airline, especially in the context of the present world economic downturn and the hard demands that are being made on the budget,” he added.

As part of the privatization terms, the strategic investor is required to agree to the following:

a.  Maintain Air Jamaica’s identity
b.  Effectively control and manage the company
c.  Ensure that Air Jamaica’s fleet composition and route structure operate at optimal levels of efficiency
d.  Provide reliable service on routes from and to Jamaica

Sustained work toward privatization of the airline began almost 10 months ago in March 2008, with the plan from the outset being for it to be divested within the 1-year period ending March 31, 2009.   All strategies implemented up to this point – including the use of some of the world’s foremost airline consulting experts to do a thorough assessment of the airline and its operating environment and to help chart a course toward Air Jamaica’s sustainable development – have been designed to help make the privatization successful, Sen. Wehby added.