WESTERN BUREAU:

Effective February 26, Air Jamaica will exit its Atlanta, Los Angeles, Miami and Grand Cayman routes, taking the jobs of an estimated 600 staff members in the process.

The national carrier will also discontinue service between Jamaica and Barbados and Jamaica and Grenada, President and CEO Bruce Nobles said in a three-page letter to staff, outlining the airline's cost-cutting business plan aimed at quickly stemming the substantial cash losses at the company and positioning the airline on a path to profitability

The news comes one week after the airline's senior vice-president, Subodh Karnick, skirted around questions posed by this newspaper about the cutting of the routes during the industry's most important event, the Caribbean Marketplace in St Lucia.

"We have a revised business plan in front of Cabinet and I can't speak on the specifics," he said then.

However, yesterday, the airline's president released a bombshell confirming weeks of speculation, stating that the airline will seek to eliminate cash losses by:

Exiting loss-making markets and revising capacity in others.

Improving aircraft utilisation by more than 25 per cent and

Executing an efficiency plan and productivity improvements that will bring Air Jamaica's unit costs in line with international standards.

He said the board of directors of the airline, the minister of finance and the Cabinet had approved the plan.

Speedy privatisation

According to the CEO, the divestment committee of the board also believes that this plan would further the effort for a speedy privatisation and Senator Don Wehby has reviewed it and fully supports the strategy.

Along with the changes, the fleet will be reduced from 15 to nine aircraft, and existing leases will be restructured and aircraft returns renegotiated. This decision, according to an industry expert, could cost the airline, on average, US$1.8 million per month in penalties for the next six months. Total cost for the period, which does not include staff redundancies, would amount to US$10.8 million or J$900 million.

"This is the best scenario in these very tough economic market conditions. And a leasing company that has no ready market for their planes would demand onerous terms, necessitating payments," said the expert.

As news spread throughout the tourism industry, some persons expressed shock particularly at the cut in the Chicago and Los Angeles routes. "This will affect us significantly because we have been seeing an increase of feeder passengers from south and north California," said Ian Kerr, managing director of Sunset Resorts.

Historically Air Jamaica has controlled 30 per cent of the market share, but there has been marked decrease under the current recession.

The airline is making its reduction two days before what has traditionally been the country's best month - March. It is responding to the projections outlined by tour operators who have painted a gloomy picture that March bookings were down, anywhere between 15 and 30 per cent.

janet.silvera@gleanerjm.com

Airport security carry out mock searches on St John Ambulance employees at the Norman Manley International Airport in Kingston yesterday morning during an emergency simulation exercise of an aircraft crash. - Ricardo Makyn/Staff Photographer

Routes to be cut