Gov’t had to offload Air J, says Hill

BY JULIAN RICHARDSON Assistant Business Co-ordinator richardsonj@jamaicaobserver.com

Wednesday, July 28, 2010

FORMER banker Aubyn Hill said Government had no choice but to offload Air Jamaica to Trinidad-based Caribbean Airlines Limited (CAL), noting that the national carrier was just too expensive to maintain.

“The Government has to make sure it divests itself from those things it should not be doing because every time it has to go to the market to borrow money to put into an ineffecient (entity), it is squeezing out investors who will need that money and pushing up the price of money... I believe that Air Jamaica has been an albatross from amost since it was formed,” said Hill while addressing Observer reporters and editors at the most recent weekly Monday Exchange meeting at the newspaper's head office in Kingston.

In April, the Government of Jamaica concluded negotiations with CAL for the acquisition of the fleet and routes of Air Jamaica, which has been a financial burden on the government. Under the agreement, the government of Trinidad and Tobago was slated to contribute working capital, while the Jamaican Government assumed the debt and covered the winding-up costs. At the time of its sale, Air Jamaica had an accumulated debt of some US$1 billion ($89.5 billion) and against that background, Hill is bewildered as to why persons would even question whether the deal was a good one or not.

“People always ask me about this deal, but when you have a company losing money for forty years... When you look at the future cash flow of Air Jamaica based on its history and what the airline industry is and what fuel costs can do, what are you talking about the deal? That we were able to get a deal?” exclaimed Hill.

“We didn’t see persons from Emirates coming to buy it, we didn’t see persons from British Airways coming to buy it, Virgin flies here every day and decided to stay away from us....What are we talking about?” he added.

Hill said he understood that some Jamaicans have an attachment to the national airline, likening it to their “sovereign manhood”, but said he doesn’t share those sentiments.

“I really do believe in the joking dictum that the way to become a millionaire is to be a billionaire and own an airline, and our Government was never a billionaire in the first place,” he said.

Hill spent two successful years at National Commercial Bank, to which he was recruited by billionaire owner Michael Lee Chin in 2002 to turn around the institution which at the time was near bankruptcy. He is currently CEO of the Sugar Corporation of Jamaica Holdings Limited — the entity mandated by Government to manage the state-owned sugar factories.

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Gov’t had to offload Air J, says Hill