Cayman Airways forecasting improvement in finances

Still receiving $18M from gov’t, but no net loss projected

Cayman Airways is projecting that it will end the current financial year without a net loss for the first time on record.

A rise in tourism, falling oil prices and the purchase of three jets, previously on lease, have all contributed to an improved financial picture for the island’s national airline. 

The calculation does not include the almost- $18 million in payments the airline receives from government, which it treats not as a subsidy, but as a purchase of services to support the tourism industry and domestic travel to the Sister Islands. 

Government also makes an annual $5.1 million “equity injection” to pay off the airline’s historical debt, which is also not included in the annual revenue and expenditure calculations. 

Fabian Whorms, CEO of Cayman Airways, said the results for 2014/15 came against the backdrop of improving performance over the last few years. 

According to the airline’s 2012/13 financial statements – the most recent publicly available accounts – laid before the Legislative Assembly last month, the airline incurred losses of nearly $7 million in that year, 

Auditor General Alastair Swarbrick, in his notes on those statements, pointed out that government was the airline’s biggest customer, with its payments accounting for a quarter of the airline’s revenue. He cautioned that without those government payments, the airline would be unable to continue in its current form. 

Tourism Minister Moses Kirkconnell said record tourism arrival figures for 2014 showed that government’s payments to the airline were justified. 

“We have always said that Cayman Airways is important to the country because it is the tool we use to drive tourism and to benefit our tourism product. It gives us a competitive edge over other regional small-island nations.” 

CAL has previously had issues paying bills to the Cayman Islands Airports Authority, including the passenger facilities charge which feeds the fund that will be used to rebuild the Owen Roberts International Airport.  

Mr. Kirkconnell said CAL is now paying those bills as well as addressing debt owed to the CIAA. 

Mr. Whorms said increased passenger volumes are driving up revenues. 

“This year, Cayman Airways will carry 60,000 more passengers than it did five years ago and 120,000 more passengers than it did 10 years ago,” he said. 

For the first nine months of the current financial year, Mr. Whorms said, the airline carried 16,000 more passengers compared to the same period last year. 

Mr. Whorms said a decision to purchase three of the four 737-300 jets as well as a spare 737-300 engine actually helped reduce the airline’s operating expenses. 

Previous reports suggested that the US$7.9 million purchase would save the airline an estimated $19 million over the next five years, set against a US$5.9 million annual leasing cost. However, the fleet will likely need to be replaced after that time, meaning CAL’s expenses would increase again. 

Recent reductions in oil prices have also had an impact on the airline’s bottom line, though Mr. Whorms said this was relatively minor and was offset by the increased amount of fuel required to carry a growing number of passengers. 

There is also less space on inbound flights to “tanker” fuel into Cayman, meaning the airline is often required to buy its fuel on island at a higher cost, 

“The net effect is that while the reduction in oil prices have helped our financial performance, the percentage reduction in fuel costs at Cayman Airways is far less than the percentage reduction in world fuel prices or the fuel price reductions being experienced by overseas-based airlines.” 

He added, “From all of the preceding, CAL is projected to close this fiscal year without a net loss and with its revenues in excellent alignment with expenses.” 

Mr. Whorms said government’s contributions to the airlines are classified as a purchase of services to support the tourism industry, rather than as a grant.  

In the last budget, government allocated $2.85 million to CAL to run the Sister Islands routes and $14.96 million to run what are described as “strategic tourism” routes. 

“Both of these amounts are treated as revenue once the contracted services are delivered by Cayman Airways,” Mr. Whorms said. 

The modus operandi of the airline when it comes to its “strategic tourism” routes – Chicago, Washington, D.C., Dallas, New York – is to guarantee airlift and prevent foreign carriers from gaining monopolies. Flights to the island without this option would be prohibitively expensive or nonexistent, officials believe. 

“These output payments are made to Cayman Airways for the provision of strategic and essential air services consistent with the government’s socioeconomic policies,” Mr. Whorms added. 

He said the level of government payments to CAL in future would depend on which routes it wants the airline to operate. 

He added. “The cost to provide airlift services can also vary significantly from year to year because of the airline industry’s constantly changing commercial operating environment.” 

Increased passenger volumes are driving up revenues, Cayman Airways’ CEO says.


  1. Scam, it will never happen. We have heard this PR pitch before when they want to hide their current inefficiencies.

  2. This is sadly an exercise in self delusion.What they should be saying is the actual deficit will be reduced by a miniscule percentage.
    What they should be explaining is their sky high fares to Miami which are considerably more than what it costs to fly to New York on American.How does this benefit our tourism product and give us a competitive edge?.American continually offers heavily discounted fares to destinations all round the Caribbean, but never to the Cayman Islands. Why?, just ask our national airline.
    I would also be interested to learn if they have paid over the hundreds of thousands of dollars they collected from passengers for departure taxes but never passed on to Government.

  3. We always fly Cayman Airways whenever we can. The planes are always clean and the employees friendly and helpful. It is also a great pleasure not to be charged for 2 pieces of checked baggage.

    I am sure there are savings that can be made. But remember that with just a handful of aircraft one cannot achieve the same economies of scale that larger airlines can make.

    You can obviously strike a better deal when you order 200 aircraft than when you order 1.

    Do we really want to be reliant on foreign airlines that could stop flying here in a moment?

    Having said this, can’t they do something about selling their old office building which has been vacant for years now and must be riddled with mold?

  4. Whatever fancy words you use to describe it that 18million is still a good old-fashioned subsidy.

    What we really need to see is a breakdown showing how much of the actual operating costs for specific routes are being covered by public funding. We also need to see load factors and how many of the passengers being carried are actually fare-paying.

    Only then can we judge whether or not this is money well spent. I have a nasty suspicion that a full release of these so-called commercially sensitive stats might show that more than a few of the publicly-funded seats are being used by local residents on jollies rather than bringing in tourists.

    It is certainly no good claiming that these payments are somehow protecting routes from outside competition – that assertion is not only complete bunk but shows a disturbing lack of understanding of how the airline industry works. Any major player eyeing up these routes for a future takeover would not be put off by any thinly-disguised government subsidy. If CIG really want to protect these routes there is a much simpler and cheaper option – encourage CAL into code sharing agreements with one of the major carriers.

    This ignorance extends itself into the claims about the 737s. These aircraft were effectively saved from the boneyard because they had reached the point where their residual value to the leasing company was less than their worth parted out for spares. CAL may think they got a bargain here but any gain they made on this deal will be very short-term. That claimed 19million saving over five years will mean nothing when the aircraft have to be replaced in a few years.

    Right now what CAL should be doing is down-sizing to become a true regional airline while working with major carriers like AA to develop and sustain the longer routes into North America. Trying to move in any other direction is just throwing good money down the drain.