The Tribune

By NATARIO McKENZIE

Tribune Business Reporter

nmckenzie@tribunemedia.net

The Government yesterday said the seeming $30 million increase in Bahamasair’s subsidy for the 2015-2016 fiscal year was an ‘advance’ to enable the carrier to purchase its new fleet, which was subsequently repaid.

Michael Halkitis, minister of state for finance, said the Government had advanced funds without a guarantee to enable Bahamasair to start purchasing its ATR planes, as the $120 million loan financing for the new fleet had yet to be completed.

Mr Halkitis was responding to questions from Central Grand Bahama MP, Neko Grant, over what appeared to be an additional $30 million subsidy given to Bahamasair.

The Government’s accounts for the nine months to end-March 2016 showed a subsidy of more than $44 million to the airline, when the House of Assembly had only approved $14.8 million for the full 2015-2016 fiscal year.

Mr Halkitis explained yesterday that Bahamasair had secured financing a consortium featuring CIBC FirstCaribbean International Bank and Credit Suisse to purchase its new fleet, but the facility had not been put in place by the time the first aircraft were due for delivery.

“During the course of finalising the loan, some of the aircraft came forward to be delivered,” Mr Halkitis said. “What the Government did was to advance money to Bahamasair so they could take delivery of these aircraft.

“When the loan was completed that money was repaid to the Government. At the end of this year it would be reflected that Bahamasair has repaid those funds to the Government.”

    Mr Halkitis added: “There is no guarantee in place. The aircraft are ATR’s, and I am advised that the fuel savings as opposed to what they’re using now will be in the area of 30 per cent, and that will increase the profitability of Bahamasair and enable them to better service the debt.

“The Government has been giving a subvention to Bahamasair for the past 40 years. Funds were advanced during the process of the loan being finalised and the funds have been repaid by Bahamasair.”

Mr Grant said yesterday that the Christie administration has not said under what authority it was able to advance the funds to Bahamasair.

Last July, the Government and Avions de Transport Régional (ATR) signed a $100 million contract for the purchase of five ATR 600 planes to replace Bahamasair’s aging Dash 8-300 fleet.

The contract finalised the sale of three 50-seat ATR 42-600s and two 70-seat ATR 72-600 planes.