Owning fleet key to improving finances
Cayman Airways bosses say the airline made a $3.1 million profit in the past year.
It is the first time on record that the national airline has ended a financial year without a net loss.
The airline does not include the $23 million it received from government in the last budget in that calculation.
Fabian Whorms, chief executive officer of Cayman Airways, said the airline’s finances are largely misunderstood.
He said CAL generates $200 million annually for the Cayman Islands economy and therefore represents value for money for the government’s investment, which it classifies as a purchase of services, rather than a subsidy.
“The return that Cayman Airways gives is sometimes not easily understood because the government also makes payments for the services we provide,” he said.
“The more we are able to provide these services without losing money, the more we feel we are less of a burden on the government in terms of them having to make these payments, despite the fact that we are delivering a return tenfold.”
Cayman Airways received a $5.1 million equity injection to address past debts, as well $18 million from government to support the domestic service to the Sister Islands and “strategic tourism” routes in the last financial year.
Tourism Minister Moses Kirkconnell has said the government payment is intended as a purchase of services to guarantee airlift and to keep the price of travel to the Cayman Islands low, boosting the tourism sector.
According to the airline’s 2012/13 financial statements – the most recent publicly available accounts – the airline had a loss of nearly $7 million that year, even after government payments were considered.
Mr. Whorms said the improving financial position is due in large part to the purchase of three Boeing 737 jets. “Operating leases are the most expensive form of having the asset. Purchasing the aircraft has added around $4 million to the bottom line. We have also had a little bit of help with the low fuel prices,” he said.
Philip Rankin, chairman of the Cayman Airways board of directors, said the airline owning its own aircraft and getting out of costly operating leases is the way to a more profitable future.
Speaking on Friday as the airline took possession of a new 34-seat turboprop that will fly between Grand Cayman and Cayman Brac, Mr. Rankin said additional aircraft could be purchased in the next few years.
He said he would like to see a second Saab plane to service the Brac route and add options for short-haul flights to Cuba and Jamaica.
Within the next five years the airline will look to replace the Boeing 737 jets, which he said are about halfway through their useful life.
“They still have a good 10 years, but we are not keeping them for that long. We want to keep them for about five years and then start phasing in next generation aircraft,” Mr. Rankin said.
He said the airline’s improving finances gives it some flexibility to stockpile cash for the new planes.