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The Air Jamaica, Caribbean Airlines Transition

ImageCommencing May 1, 2010, a transition plan will be implemented under which Air Jamaica will continue its current operations under a contractual arrangement with Caribbean Airlines.

This news was announced yesterday during a media briefing held at Air Jamaica’s Kingston office. Air Jamaica’s Chairman, Hon. Dennis Lalor, who made the announcement, also explained that the transaction had been effected in a manner that was designed to help ensure a seamless transition for customers or shippers. Among other things, this means that there will be no disruption of service, as all tickets previously issued to the passengers will be honored.

On Tuesday, April 27, the Cabinet of the Government of Jamaica announced it had approved the terms of an Agreement for the Divestment of the operations of Air Jamaica to Caribbean Airlines, effective Friday, April 30. During yesterday’s press conference, the Air Jamaica Divestment Team provided details of the transaction, including: 

  • Effective May 1, 2010, Caribbean Airlines will assume full financial responsibility for Air Jamaica.
  • The Government of Jamaica will transfer Air Jamaica’s routes to Caribbean Airlines for a 16 percent ownership in Caribbean Airlines. However, the Government of Jamaica will remain the owner of all of Air Jamaica’s other assets, including its real estate assets and its industrial assets.
  • After a period of 6 – 12 months, Caribbean Airlines will fully implement its plan to provide sustainable airlift to/from Jamaica.
  • Those plans call for the initial operations to continue serving routes from New York (JFK) to Montego Bay; JFK to Kingston; Baltimore to Montego Bay; Philadelphia to Montego Bay; Toronto to Kingston; Fort Lauderdale to Montego Bay; and Fort Lauderdale to Kingston. Any changes to that schedule would be announced by Caribbean Airlines in due course.

Lalor noted, “Under these terms, the deal is, financially speaking, superior to the initial bid submitted by Caribbean Airlines and superior to the transaction which was contemplated with the other bidder, Indigo Partners.”

He added that, in order to ensure the long term sustainability of its new Jamaican network, Caribbean Airlines must operate a streamlined operation. As it has already been announced, all Air Jamaica employee positions will be made redundant on April 30, 2010. Approximately 1,000 of them will be re-hired by Caribbean Airlines during the transition period. These employees have already been identified and have been given the opportunity to work with Caribbean Airlines.

Lalor emphasized, “We believe this transaction creates a unique, historic opportunity to create a true Caribbean air carrier, leveraging the expertise and strengths built up by Air Jamaica and Caribbean Airlines to be able to compete in a fierce global market environment.”