Finance Minister Audley Shaw (centre) signs the US$820,000 grant agreement from the United States Trade and Development Agency (USTDA), to assist in the divestment process of Air Jamaica. Sharing in the occasion are USTDA director Larry Walker (right), and Senator Don Wehby, Minister without portfolio in the Ministry of Finance and Public Service. (Photo: Lionel Rookwood)

The government has received a grant of US$820,000 (J$59 million) from the United States Trade and Development Agency (USTDA), to assist in the divestment process of the national airline, Air Jamaica.

Minister without portfolio in the Ministry of Finance and Public Service Senator Don Wehby said the funding will be used to identify and pay high- calibre consultants to the divestment process which is expected to be completed by March 2009.
"We went out and sought to identify the best advisors possible," said Wehby at the signing ceremony, held at the Ministry of Finance on Monday.

"The airline industry, given the fact that oil prices are US$120, is under some pressure and we wanted to ensure that we get the best advice possible in terms of meeting our objectives," he said.

Through the International Finance Corporation (IFC), which also granted US$825,000 to aid in the privatisation process, the government has contracted the services of GRA Incorporated, one of the world's leading strategy consulting firms in the aviation business. GRA will submit a full report to the government on May 15, addressing short-term fixes to improve operations of the airline; reorganisation of the company; and the management support needed to ensure that the airline can be privatised within the projected timeframe.

"We are hoping that as soon as this report is received, we can discuss it with the members of the cabinet and hopefully roll it out from there," disclosed Wehby.

Noting that the national airline has been a haemorrhage to the economy for many years, losing an average of over US$100 million per annum, both Wehby and Finance Minister Audley Shaw, used the occasion to highlight that the initiative is in the best interest of the cash-strapped country.
"It is unsustainable for the government to continue to support the airline at that level," said Wehby. "There are other services out there that are in need of funding and are being deprived because of the losses of Air Jamaica."

Added Shaw: "We are all emotional about Air Jamaica but it still takes cash to care. The issue is whether we sit around as a government and allow the airline to continue to haemorrhage, and eventually close, if we don't take strong action now, not only to save the airline but more importantly to make it a viable entity for the country."

The government is seeking to transfer complete or substantial majority ownership and full management control of Air Jamaica. Wehby noted that the government wants the airline to be structurally or contractually linked to an experienced global carrier that can help steer it to economic viability.

'We believe that our national airline is in fact a great asset, and once the airline can be recapitalised properly and the proper structure put in place, we certainly believe that the airline can return to profitibality," said Wehby. "However, the issue is that the government of Jamaica cannot afford to recapitalise the airline and that is a main criteria in terms of who will be our partner in the airline; and of course they must have airline experience with the global linkages so that will support our tourist industry."

Wehby also assured persons concerned about losing the 'Air Jamaica' brand, looked upon as a national symbol by many, that this was unlikely to happen due to the fact that the highly recognised brand is seen as one of the airline's strongest attribute.

"In our briefings to the IFC and to the consultants, we told them that we beleive very strongly that we would like to retain the brand 'Air Jamaica', and the response was that (they) were going to ask (us) if they could retain the brand because it is such a positive and strong brand," he said.

In his address on behalf of the USTDA, director Larry Walker said the grant given to the government is an important step in Jamaica's development, making a significant difference in the budget and the long term viability of Air Jamaica.

"In today's global economy, trade is a catalyst for growth and transportation services provides a means for private sector to lead in that development," said Walker. "The USTDA supports (Jamaica's) objectives and wants Jamaica to be successful; we are pleased to be apart of the privatisation and revitalisation of Air Jamaica."

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