Government to fund multi-million dollar severance payment for dismissed CAL employees

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Finance Minister Colm Imbert

PORT OF SPAIN, Trinidad – Finance Minister Colm Imbert says the state-owned Caribbean Airlines (CAL), which earlier this week announced that it would be retrenching up to 450 employees, would need at least TT$110 million (One TT dollar=US 0.16 cents) to meet severance payments.

“Caribbean Airlines does not have the required finances for the severance payments, and therefore the severance payments will be financed by the Ministry of Finance,” Imbert said in response to a question from the Leader of the Opposition Business in the Senate, Wade Mark.

“The estimate is given to the Ministry of Finance at this time, which is subject to finalization, is in the vicinity of $110 million.”

CAL on Monday had announced a loss of TT$172.7 million as well as a 75 percent decline in revenue, compared to the same period in 2020.

In a statement, the airline, which has been hard hit by the coronavirus (COVID-19) pandemic, said that the figures represented its unaudited financial results for the first quarter of 2021. It has also announced a significant reduction in its workforce, with at least 450 jobs being lost.

CAL said that the losses follow a similar downturn in 2020, which saw an operating loss of TT$738 million compared to operating profits for 2018 and 2019.

Imbert told the Senate that the airline had informed the government that passenger demands on its routes are forecasted to decrease short to medium term by both the International Air Transport Association (IATA) and CAL’s consultant, Amadeus.

He said he was told air traffic is forecasted to return to pre-COVID-19 levels by 2023, and with these predictions, CAL has decided to reduce its fleet and, subsequently, its staff complement.

“I am advised, and I must say I am saddened by all of this … This is not something that any of us would have wanted to see. I am advised that Caribbean Airlines is going to reduce its jet fleet to eight jet aircraft and its turboprop fleet to five ATRs.”

As a result, that takes the airline’s fleet down from the current 16, including even ATRs and nine Boeing 737 jets, to 13.

“Any separation of workers is directly due to reducing the fleet size and reduction in the routes. Notwithstanding reduced airline size, the routes will be operated at the highest level of safety and service,” Imbert said.

He told legislators that the company is putting in place support systems for any potentially affected workers, including counseling services for them and their families, through the Employee Assistance Programme, outplacement services coordinated with the external recruiting agencies and Labour Ministry, transitional training regarding career guidance/support and financial management.

CAL chief executive officer, Garvin Medera, has said that new measures being implemented by the airline will not affect the quality of service, safety, and customer care.

In a letter to passengers, Madera acknowledged that the COVID-19 pandemic had impacted “all aspects of our lives,” causing “an unprecedented shock to air travel, resulting in border closures and reduced travel demand, as the world grappled to deal with the virus.”

He said over the last year, the pandemic has had a “damning impact on Caribbean Airlines’ operations and financial position,” but “despite these monumental challenges…we continued to offer services on many routes and provided invaluable repatriation flights for Caribbean citizens.

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