Caribbean Airlines (BW, Port of Spain) will reduce its fleet and route network over the course of the year as part of a streamlining strategy following a loss of TTD172.7 million Trinidadian dollars (USD25.7 million) and a 75% revenue decline in 1Q 2021 compared to the same period in 2020.
CAL spokesperson, Dionne Ligoure, informed ch-aviation the strategic plan was still “being refined”. Once decisions were confirmed more information would be shared with stakeholders, she said.
However, finance minister Colm Imbert has since confirmed in a note to parliament that CAL's fleet will be reduced to 13 aircraft, comprising eight jets and five ATR turboprop planes.
The airline’s fleet currently comprises ten B737-800s (of which seven are in active service, being leased from either AerCap or Carlyle Aviation Partners) and seven ATR72-600s (of which six are in service and two are leased from Nordic Aviation Capital), according to the ch-aviation fleets module. As previously reported, the airline also has commitments for twelve B737-8s from undisclosed lessors, which were due to replace its B737-800s, starting in December 2019. Ligourne declined to detail which aircraft would be retired, or how the B737 MAX 8 order would be affected.
The airline, in a statement, said major cost reduction measures in all areas of its operations – specifically human resources, fleet, assets, and route network - were required to ensure a sustainable business model for 2021 and beyond. This was particularly as travel was not expected to return to pre-COVID-19 levels despite authorities having stated they would look to reopen the country's borders, with restrictions, in the coming weeks.
“The announcement that the borders of Trinidad and Tobago may soon reopen is welcome news, but all forecasts suggest that the recommencement of travel will not be in the same volumes as they were pre-COVID,” CAL said. “Therefore, until air travel regains its pre-COVID momentum, the airline will need to adjust its operations to cater for a reduced scale of demand after the opening of the borders. Put simply, passenger demand in the short to medium term is not going to recover sufficiently to support the existing company structure after the reopening of the borders.”
Since the beginning of the pandemic and the suspension of its operations at its base in Trinidad and Tobago, the airline has seen passenger numbers plummet and flight numbers reduced to less than 10% of normal operations.
The latest losses follow a similar downturn in 2020, which saw the impact of COVID-19 result in an operating loss of TTD738 million (USD109.2 million) on revenue of TTD802 million (USD118.6 million). Still, cost reduction efforts have resulted in 52% savings in 1Q 2021 compared to the same period in 2020.
The airline has also been kept afloat by a Government of Trinidad and Tobago guaranteed loan and cash injection together totalling USD100 million. But by May 2020, CAL had drawn down most of its funding from the USD65 million government-guaranteed loan. It is recalled that CAL is 88.1% owned by the government of Trinidad & Tobago with the Jamaican government holding the remaining 11.9%.
In terms of employees, the airline has determined that 25% of its workforce or about 450 positions throughout its network are surplus to its current needs. As earlier reported, CAL last month was looking at instituting early retirements after instituting furloughs and wage reductions last year. About one-third of employees have already been temporarily laid off.
