The Tribune

• Govt already injects double full-year subsidy

• As payroll late at cash-strapped flag carrier

• ‘Chicken and egg’ state on flight frequency

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamian taxpayers have spent $40m “and counting” to prop up Bahamasair over the past seven months, its chairman has revealed, while confirming the airline was late meeting payroll last week.

Tommy Turnquest disclosed to Tribune Business that the government has already spent more than double what was budgeted for the entire 2020-2021 fiscal year to keep the national flag carrier in the air, adding that the delay in receiving another injection of funds from the Public Treasury was responsible for the late salary payments to hundreds of staff.

Some $19m was allocated to Bahamasair for the 12-month period to end-June 2021, and Mr Turnquest agreed that the current level of support for the airline was “unsustainable” amid the economic and fiscal devastation inflicted by COVID-19.

“The human resources director put out a company-wide memorandum yesterday [Thursday] indicating that it was likely to be late, and that it was likely to be late,” he told this newspaper of the payroll delay. “That it would be either late Friday or first thing on Monday.”

Mr Turnquest, confirming that the hold-up had resulted from the wait to receive further Treasury funding, since the cash-strapped airline lacked the resources to meet payment itself, added: “Our bankers don’t hit the button to pay everybody until the money hits the account.”

Bahamasair staff who bank with Royal Bank of Canada (RBC) were likely to be paid by close of business on Friday, given that the airline’s accounts were with this institution, while their counterparts who use other banks are likely to have endured a frustrating wait for the monies to drop.

Mr Turnquest, meanwhile, said the national flag carrier’s management were in talks with the three unions representing its staff to alter the present “every two weeks on Friday” payment schedule to one that is bi-monthly.

Emphasising that this does not involve any pay cuts, the Bahamasair chairman explained: “First of all, I think Friday is a bad day to do it, so we’re having some discussions with the unions to see go from every two weeks to twice a month.

“In January, we had three pay days. Instead of dividing the salaries by 26, or every two weeks, divide them by 24 and pay staff on, say, the 10th and 25th of every month. Executive management is having discussions with the three unions, and hopefully we will come to some agreement where we do that. It provides a little more certainty on the date.”

Admitting that COVID-19, and associated travel restrictions and health protocols, have left Bahamasair unable to pay its roughly $3m monthly wage bill from resources that were already strained prior to the pandemic, Mr Turnquest pointed out that the Government had spared the airline’s staff from the furloughs and temporary lay-offs imposed on many in the private sector.

“Obviously it’s unsustainable the Government continuing to fund Bahamasair to the tune it’s funding it,” he told Tribune Business. “We’re still counting. It’s to the tune of about $40m from July 1, 2020. It’s a lot, it’s a lot.”

Mr Turnquest said Bahamasair, in common with all airlines and the global travel and tourism industry, is depending on the successful roll-out of COVID-19 vaccines in this nation and major tourism source markets to enable its load factors and route schedule to return to something resembling pre-pandemic normalcy.

While the airline had enjoyed a $1.7m top-line for the four weeks from Thanksgiving to December 20, 2020, he added that this represented just over 25 percent of the revenue earned during the same period in 2019.

“For the month of December we made $1.7m, just under $2m, and you compare that with the $6.7m we made in 2019,” Mr Turnquest said. “But if you compare that to the month before, which I guess would have been $900-odd thousand in November, if you compare those four weeks with the weeks from Thanksgiving to December 20, we went from $900,000 to $1.7m.

“That was almost double, but you have to put that against the $6.7m from 2019. That $1.7m in 2020 represents a sharp drop from 2019.” He added that the relief over confirmation the US government will not impose a mandatory quarantine on travellers returning to or visiting that nation had not impacted Bahamasair’s passenger volumes to-date.

“We haven’t seen an uptick in our load factors since the beginning of the year,” Mr Turnquest said. “January and February are normally very slow months anyway, but we haven’t seen any real uptick. It’s really, really down, primarily year-over-year.”

Still, he added that Bahamasair had started “to ramp it up a bit more” in terms of its schedule and flight frequency with effect from February 8 in response to relatively low COVID-19 infection rates locally and the presently-stable travel protocols.

“When we had one flight a day, we’ve ramped that up to two times per day, and in the south-eastern Bahamas - where we were going once a week - we are now flying two times’ a week,” Mr Turnquest disclosed. “It’s a real chicken and egg situation. People are saying we don’t book your flights because there’s nothing out there, and we say we can’t put flights on because we don’t know what the demand is.

“We’re trying different things. We are small enough to be flexible in a lot of things that we do. Again, this COVID-19 situation, every day it’s something different. We really have to keep a close monitor on that. The one thing that COVID-19 has taught us is that change is inevitable.”

Mr Turnquest said “what really hurt” the national flag carrier was Cuba’s move to tighten its health and travel restrictions on incoming flights in a bid to contain COVID-19 infections, as this cut Bahamasair’s six flights per week to one every two weeks.

Prior to the introduction of these measures, Bahamasair had been enjoying 75 percent passenger load factors on its two flights into each of Havana, Holguin and Santa Clara. “They were very good. We had a guarantee from a wholesaler of at least 100 seats per flight,” Mr Turnquest said.

“We used the 700s, the jets, which have 138 seats, and many of them had 135 seats full right up to 138. We had some good loads on that. That’s where we going six times a week. Now we’re going once every two weeks. That’s really cut it down. We’ve stopped going to Holguin and Santa Clara, and are only going to Havana.

“We’re trying to make the best of it and do what we can, and are continuing to look at all measures. We’re engaged in dialogue with the employees and are doing everything we can. We’re going to explore some options with the Government and see what is possible.”