The Tribune

By FAY SIMMONS

Tribune Business Reporter

jsimmons@tribunemedia.net

Bahamasair's revenue is projected to grow by up to $8m "over the next year" as it targets "millions" in potential savings from the refinancing of existing loans carrying a 13 percent interest rate, it was revealed yesterday.

Chester Cooper, deputy prime minister, said the loss-making national flag carrier was targeting top-line expansion through the addition of another jet to its fleet that will allow it to increase its routes and seat capacity.

Suggesting that this forecast growth could "make the case" for reassessing the level of annual taxpayer subsidies provided to the airline, he said Bahamasair hopes to have audited financial statements up to and including 2022 ready by year-end 2023.

Mr Cooper asserted that the airline's enhanced financial reporting will make it easier to seek refinancing for the existing loan, with its burdensome double digit interest rate, that financed Bahamasair's last major fleet upgrade.

Bahamasair's subsidy has seen a modest cut in the 2023-2024 Budget, being reduced to $28m from $30.7m in the current financial year, and it is forecast to remain at the former figure for the next two fiscal periods ending in 2025-2026.

“We have modestly reduced the subvention for Bahamasair this year by several million. We have placed a great deal of focus on new international routes: Tampa, Cincinnati, Cleveland and Nashville to Freeport and onward to Nassau," Mr Cooper said. “We have also returned Bahamasair’s seasonal flights between Freeport and Orlando, and added a new route from Freeport to Raleigh-Durham and, hopefully, another from Fort Lauderdale to George Town, Exuma.

"These international flights bring tourists who spend more and maximise the economic benefit of our $20m-plus investment per year in our national flag carrier. To accommodate this, Bahamasair has upgraded its fleet and continues to do so. It purchased one additional B737-700 Next Generation aircraft at the end of May 2023, which is expected to be in service by this August.

"This acquisition will allow for added routes and an additional 148 extra seats. We expect Bahamasair’s revenue to grow as a result over the next year by as much as $8m, making the case for re-examining the level of taxpayer support needed in the medium term." However, the national flag carrier's expected losses were not disclosed.

Mr Cooper accused the former Minnis administration of allowing Bahamasair's financial reporting to fall "unacceptably into arrears". He added: “The airline has since successfully completed the 2020 financials and provided the 2021 and 2022 trial balances to external auditors. Bahamasair expects to be fully up-to-date with its financial statements by December 2023.

“This will allow for the refinancing of the airline’s existing aircraft loan to reduce from the present 13 percent interest rate for what we are hoping will create millions in savings. The pay-off and re-writing of loan commitments will also allow management to apply for more capital funding to assist in the acquisition of another aircraft in the upcoming fiscal year.

“Management will continue to move the airline toward a cashless environment. Bahamasair is currently cashless in the US, Turks & Caicos and at LPIA..... Bahamasair expects to add cargo services to Haiti and Cuba and other destinations during summer 2023, which will operate at night, when the equipment usually sits idle.”

Mr Cooper said Bahamasair is prioritising interline and code-share relationships, and added: "Bahamasair presently has several key airlines as interline partners including Delta, COPA, British Airways, United and others to be announced soon.

“For the upcoming fiscal year, Bahamasair is targeting ten additional airlines for codeshare/interline agreements to create seamless travel throughout the world. We must not only assess the value of Bahamasair in terms of tax dollars invested, but we must also consider its overall benefit to the economy of the country in terms of the number of visitors it brings and how that spending impacts our GDP.”

Mr Cooper revealed he will travel to Qatar to sign a memorandum of understanding (MOU) on tourism and aviation, and garner support for various initiatives. He added that he is also in discussions with Emirates Airlines for support in making Grand Bahama a cargo hub for the Caribbean, and for foreign direct investments focused on aviation and renewable energy.

He said: “We are developing an important partnership with Qatar Airways, one of the most successful airlines in the world, for new routes, cargo, technical assistance and getting more value out of our national investment. In the spirit on ongoing building of strategic relationships, I will travel to Qatar next week along with a small team to sign an MOU on tourism, sign an MOU on aviation, discuss co-operation and technical assistance with Qatar Airways as it relates to The Bahamas, garner support for the Bahamas Aeronautical Academy, garner support for building capacity for air space management, garner further support for Nassau as a hub for non-stop flights from the Middle East for multi-destination Caribbean travel.

“We are having a similar conversation with Emirates. We will get support for Grand Bahama International Airport as a logistics hub for air cargo for the Caribbean and Latin America region, and get support for foreign direct investments in The Bahamas with a focus on aviation and renewable energy.”