CAL climbs out of fiscal hole

(CNS Business): The chair of Cayman Airways Ltd told the Public Accounts Committee Thursday that he expects the airline to have cleared its bank loan debts within three years because a number of factors have combined to help it climb out of the “hole it was in” a few years ago. Talking about the turnaround in fortunes of the airline, Philip Rankin said they were “seeing the fruits of our labour now”, as he pointed to the falling debt, as well as cuts in expenses and operating losses. Rankin said the debt was now around US$19 million and bank loans would be cleared in less than three years.

He spoke of ongoing talks with the Cayman Islands Airport Authority and others regarding the fees that CAL owes for airport services.

But answering questions from the committee, Rankin pressed the message that a combination of new policies, a focus on expenses, better operational funding from government for strategic services and the equity injections, plus the fall in fuel prices had combined with the management decision to purchase aircraft to turn around the fortunes of the airline. He said that the days of rushing down to Treasury to collect the subsidy cheques so CAL could make payroll each month were over.

The decision to change from leasing to buying was the major factor in the financial turnaround, he said, because there were always issues on leases where CAL was not getting everything it paid for. He said the airline management had concluded by 2012 that if they could buy the fleet, it would save a great deal of money. But they were faced with the ban on borrowing by the Foreign and Commonwealth Office, and even though an economic advisor from the British government had accepted the logic, the airline was still prevented from borrowing the money.

In the end, the airline found a way to buy the planes; it managed to get a freeze on its bank loan payments and redirected the equity injection from government and bought three planes for the price of the annual lease.

Rankin said that with the purchase of new planes, the airline would save even more money going forward, claiming that the arrival of the new fleet would “change the face of CAL” and provide significant cost savings in fuel, maintenance and efficiency. He added that the new planes would allow CAL to fly much further and pointed to the goal of opening up gateways on the west coast of the United States.

“I believe CAL is on the right track, and if it continues down this path, we will be in a very good position,” he added.

Following misunderstandings about the appearance of the CAL executives at PAC, Rankin also apologised about the miscommunication and said he was always happy to talk about good news about the airline.

See CAL 2014 Financial Statement on the CNS Library

Tags: Cayman Airways, Featured, Philip Rankin, Public Accounts Commitee

Category: Local Business, Transport