Payment issues ail Cayman Airways

A
number of businesses that were allowed to have credit accounts with Cayman’s
national airline for cargo shipping services never actually paid Cayman Airways
for those services, a 2009 audit has shown.

In
other cases, some companies that owed CAL did not pay for a number of years,
according to the audit that was done between January 2008 and September 2008 by
the government’s Internal Audit Unit.

Despite
the non-payment issues, those customers were still given credit to purchase
airline services, the auditors found. As of September 2008, nine private sector
company accounts reviewed in the report owed US$282,561.80 to CAL.

“A
number of account-holders had not made any payment on their account for
significantly long periods, and in some instances no payment was seen on
record,” the audit report stated.

According
to airline records obtained by auditors, one company that had not recorded a
payment since May 2005 – and had accumulated bills totalling more than
US$68,000 – was still allowed to receive credit for cargo services.

Four
of the 11 companies reviewed in the audit had no record of payments ever being
made. Those businesses owed more than $15,000 to Cayman Airways, the audit
revealed.

The
Internal Audit Unit noted that some businesses had been “deliberately tardy”
with making payments. Others, however, said they never got a bill from CAL.

A
company named Nippon Express USA, Inc, which owed more than $6,000 at 30
September, 2008 told auditors it had been requesting “proper statements” on its
accounts for five months and had never received them.

Another
business, Geo Logistics, claimed it had never received a billing statement from
the airline. Local shipper Thompson Agencies said its invoices for CAL services
were sent to the wrong company.

“There
does not seem to be a consistent approach in place to manage accounts
receivable,” the internal audit noted.

In
its response to the audit, Cayman Airways noted that statements from customers
could not always be taken “at face value”.

Nippon
Express, for example, disputed how the airline calculated its shipping charges.
CAL maintained the rates were correct. It was not stated in the audit if
payment had ever been received.

Geo-Logistics
(now known as Agility Logistics) and Thompson Agencies are now working with the
airline to resolve account issues, Cayman Airways officials said.

The
airline said it planned to add another accounts receivable officer to monitor payments,
and was looking at legal options with regard to collecting some of the bills.

“While
this may seem a simple task, the fact that many of the outstanding invoices
date back to 2004 and 2005 (makes) it a challenge to research and verify,” CAL
wrote in its audit response.

Airline
officials noted that a lack of attention paid to accounts receivable prior to
2007 “was quite evident”.

Auditors
recommended that Cayman Airways not grant additional credit to freight
customers until indebted customers had settled their bills. It also offered to
recover outstanding amounts for the airline at the rate of CI$15 per month for
each debtor agency.

The
failure to collect on accounts receivable was one of several areas noted in the
October 2009 audit report where CAL was missing out on revenues it should have
been collecting. The airline is typically subsidised by the Cayman Islands
government at the cost of millions of dollars per year.

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1 COMMENT

  1. Does Cayman need Cayman Airways? I dont see why personally. CAL used to be / is referred to as the "national flag carrier". Is the operation of the airline a matter of pride or prestige? I would not matter to me if they were viable enough to sustain the business without having to be consistently rescued by yearly cash infusions by the government. Are we "the people" of Cayman being told, in so many words, that we have to continue to "loan" millions to CAL in order to save face or maintain our national pride? Ironically there is not much of a sense of pride to be found these days. If CAL cannot operate at breakeven or at a profit then they should close lilke any other business. I think this news article proves that they cannot operate indipendently so sell the assets, close the doors and save us the money.

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