CAL shares may be for all
(CNS): Following speculation that the premier had entered into talks to sell a substantial share of Cayman Airways to a Filipino firm, McKeeva Bush admitted Friday that the airline was exploring the possibility of selling shares, but alongside the San Miguel Corporation, local companies and Caymanians would also have access to shares in the national flag carrier airline. In a statement to the Legislative Assembly Bush said that CAL had received a proposal from the Manila based company which owns Philippine Airlines (PAL) to “explore mutually beneficial ways of working together”, which included investment in the local airline code sharing, aircraft operations and other strategic areas.
“These explorations are very preliminary,” the premier stated, adding that while there may be “great speculation in the media as to what may ultimately be agreed,” nothing had yet been confirmed and talks were continuing between CAL and SMC.
However, a leaked document believed to be an outline of the terms of investment that SMC is interested in making suggests that the firm would be looking for a substantial chunk of preference shares, with an agreed dividend starting at 3% in the first year rising to 5% in the third year of its investment. It would then be seeking an option to convert the shares to ordinary ones, which could give the firm as much as 49% of the airline.
Bush pointed out that any agreement to sell shares would require the approval of Cabinet, the Legislative Assembly and, ultimately, the UK. He said the share sale was one of many possibilities that the airline has been exploring to raise capital.
“The introduction of preference shares as an additional class of shares is one of those considerations that could possibly be pursued to raise capital from any potential investors locally or otherwise,” Bush told legislators Friday. “These non-voting shares provide for a stated return to the holders and provide an equity source of funding for the airline.”
The premier acknowledged that under the Public Management and Finance Law and the Framework for Fiscal Responsibility the airline would need the FCO’s backing in order to issue preference shares .
“Considering the lengthy approval process, this too is only exploratory at this time,” Bush said. “Assuming the necessary approvals can be obtained, preliminary discussions with the San Miguel Corporation suggest that they may be interested in purchasing some of these preference shares in Cayman Airways. While this investment would be welcomed, the conceptual goal is also to offer the preference shares locally for purchase by Cayman residents and Cayman companies.”
Bush said that there was much going on “behind the scenes” to attract potential investors to Cayman in general, such as SMC, but CAL was also exploring the benefits that such an investor could bring.
“Many ideas and concepts are being explored and considered, but nothing is yet to the stage that could positively be released in the absence of any definitive agreed terms,” he said. “The MOU I signed with the San Miguel Corporation stated that we would explore potential ways to work together and that is exactly what we are doing.”
Bush spoke of “due diligence’ but said all the talks were exploratory. The airline needed to raise capital to, among other things, purchase the current fleet instead of leasing to reduce operational costs, he told the LA.
Bush also announced that, for the first time in many years, the airline made a small profit for the first quarter of this fiscal year. Although he did not say how small, the premier pointed out that any profit was better than the usual $2 million loss.
The announcement about SMC has raised some concerns, however, despite the exploratory nature of the talks. In particular is the mounting speculation about the real motivation of SMC to invest in an airline which is not usually profitable. North Side MLA Ezzard Miller noted that the parent company of PAL is and has been seeking ways to get around its own airline’s black-listing in Europe and category two status in the USA as a result of its home base of Manila and the shortcomings in regards to international aviation regulations.
“While I believe that if government is going to sell shares in CAL those shares should in the first instance be offered locally, if we are to seek overseas investors, we need to be very careful,” the independent MLA said. “It is very unlikely that SMG genuinely wishes to sink as much as $25 million into CAL for the dividend but because it may help it circumvent the problems it has with regulations in Europe and the United States which has prevented the airline from expanding its routes.”
Miller said he hoped that Bush had thoroughly explored the implications of attempting to assist an airline which could be an effort to by-pass, not only the British civil aviation regulations but the US Federal aviation regulations as well. “I am concerned that Cayman Airways could be punished as a result of this attempt to sidestep important international rules which are about airline safety,” he added.
See the terms which SMC are seeking for its investment in CAL and the premier’s full statement below.
Category: Politics
As a Commercial Pilot, flying for a Fortune 500 company and a proud supporter of Cayman Airways, I find this proposal to be ludicrous, without merit and irrational. Cayman AIrways does NOT need to bring in a third world country carrier to partner with. If the airline wishes to divest, then do so with reputable and recognized airlines (Virgin Group, Grupo TACA). DO not place the well respected National airline of risking be relegated to a Class II carrier by the FAA. This will start out as a small investment by PAL and SMC and within months, they will control ownership. The ONLY reason airlines invest in other airlines is to take control. Look at what US Airways did to America West, what Delta did to Northwest and even in the Caribbean what Caribbean Airlines has done to Air Jamaica, Look further south and see what Taca has done to most of the Central American carriers. Look at how LAN and TAM have merged to create a monster in South America. SO all I am trying to say is that this proposal will not help Cayman Airways in the long run, but will merely be a band aid approach and then the woulnd opens more and KX will be in demise. This is truly sad as should this proceed, Sir Turtle will be no more!!! All that Cayman Airwyas needs is to be ran like a business. Put in a managment team with airline experience, have a Board that is not bound to the rule of the Government at the time and reduce your fares to make flying the airline more attractive. Not that my comments will matter, but I trust that the people of Cayman will stand up and ensure that this proposal is NOT allowed to materialize.
Philippine Airlines "Asia's sunniest"…….Cayman Airways "Soon to be extinct" . Im wondering what if its Emirates is the one who is interested to invest in this "Tiny" airline, Maybe Caymanians will be happy but unfortunate it was an Airline from the Philippines. An airline who has been founded 70yrs ago, flying the Newest fleets of Airbus and Boeing Aircrafts. Alot of Camaynian bashers on this thread, i hope they did some research first before commenting about Philippine Airlines. It made me think that some Caymanians are ILLITERATE and IGNORANT.
They need to be thankful that there are still companies willing to invest in this very expensive country.
Do they still have money? Dont think so.
PAL ulterior motive:
http://www.pinoymix.com/news/?url=www.bignewsnetwork.com/index.php/sid/210710184/scat/0267775d6f1c3971
I hope Philippine Airlines won't push through with this. It's a waste of investment. Maybe PAL should just buy into losing car companies like what the Chinese, Malaysians and Indians do.
http://business.inquirer.net/92986/pal-eyes-stake-in-cayman-islands-airline
Isn't this what the Premier said MLA Arden McLean was "lying" about?
My God what a bogus deal! Why can't we have that General Election NOW!! Afterall, this is November. We need this man and his cronies out of office NOW!! Cayman Airways is now a Philipinos airline, my God what has our Island come to. Can't he find a decent investor within the USA? Why don't he approach Southwest Airline and find out if they would do an International route. They know how to run an profitable airline and they are American. Is he trying to destroy our relationship with the FAA? What is this man thinking? He sure as Hell not thinking Caymanian!
Lets ALL help Cayman Airways by making everyone pay their FULL Airline Fares. All former employees and board members ALL are flying for free and this includes ALL of their families too. Now C'Mon man, its time for everyone to help this airline and pay your FULL fares. Their are much too much pigs at this trough too. Cut, cut, cut this crap out now and start contributing to your own Caymanian Airline recovery. I am also wondering at this time How much does McKeeva owes the airline this time around? Last time I believe it was $75,000, I wonder how much this time?
Strangely enough this is not the real issue. CAL staff and families can not take a seat from a paying passenger so saying that its empty seats to begin with. The problem is the cost of CAL tickets to begin with.
Tell me this how many times have you heard about the high cost of CAL tickets. Let's take your family of 4 flying to Cayman and let's see whats really wrong.
The cost of CAL tickets are around US$400 x 4 = US$1,600.00
The cost of Hotels is about US$200 x 2 rms x 7 nights = US$2,800.00
So before a mouth of food is consumed we are looking at US$4,400.00
Breakfast @ US$8.00 Lunch @ US$12.00 and Dinner @ US$16.00 pp
So US$36.00 pp x 7 = US$252.00
Car Rental = US$60 pd = US$420.00
So before any entertainment or sights its US$5,072.00 or US$1,268 pp
Now you know why cruises are catching on and air travel is falling.
Let's now throw in the recession and I hope you can grasp the full situation.
Seats are not being filled because CAL and Cayman is expensive to travel to. We need to bring down the cost of Cayman and CAL to make it more attractive for visitors. CAL is first step because that's what gets most tourist. They see the cost of getting there and rule us out.
If we can fill seats on the planes then the whole CAL staff and families become a mute point because they are wait listed and won't get on.
How do I know this? Because I spent some time working there.
So the 800lb gorilla is not CAL Staff and families it's filling seats with paying passengers. Solve that and all other things fix themselves.
"Strangely enough this is not the real issue. CAL staff and families can not take a seat from a paying passenger"
In theory, perhaps, but I know for a fact that paying customers have been bumped for freebie passengers in certain cases. It's only a matter of who it is trying to get a seat.
Philippine Airlines itself is a good and safe airline. It is the only IATA IOSA-certfied Philippine carrier. It is the Philippine government, with the very poor performance of the Civil Aviation Authority of the Philiipines, which is at fault why the airline is on the watchlist. San Miguel Corporation is a leading conglomerate in Southeast Asia, and certainly it has something to offer for the good of Cayman Airways and Cayman aviation.
I saw a comment that stated that the CI Government (dapeople) spend ฿20,000,000.00 dollars per year to keep cayman aIrlines flying. That is about ฿400.00 per person on this island. Everybody on this island benefits from CAL flights. You can’t even buy a 1/’2 page ad in a locale paper for ฿400.00 CI…………..
So “to date ” the national carrier is a bargain for international advertising and without CAL controlling prices (even if it looses money, like ALL AIRLINES EVERY WHERE IN THE WORLD) the other carriers would inflate their pricing for this desirable location. Do you want to spend ฿1000.00 US to buy diapers in Miami??
cal is a perfect example of what is wrong with cig……inefficent, bloated, overstaffed, under performing……etc…..
Maybe this could be a good thing because new shareholders would not tolerate such waste and incompetence from the senior management who are all political pawns and earning big bucks to run the company like a CYB mafia business. CAL is a joke and unless they remove the politics and protecting those who feel they are irreplaceable things will never change.
Nice exactly how much due diligence does the Premier do? Sorry about the illiteration. This appears, without too much scrutiny, as just more example of his seat-of-the-pants deals. It also appears he is flying around the world in a whirlwind approaching, or, being approached by, anyone with even the remotest interest in making an investment. "A Wing and a Prayer would not be too far off as an apt description. There are many out there I'm sure and perhaps one of them may turn out be: real or: possible but time is running out even as his AirMiles accumulate. This gives the impression our leader is like one of those people at a slot machine. Hoping to hit the jackpot even as he puts the last of the household funds on the line. That wouldn't so bad if….he came home and accepted responsibility…or occassionaly won. Or broke even. But each of these wacked-out deals has cost. In time, international reputation and money. I forget how many suits CIG has had to settle since his gambling got out of control. And it may be as simple as that: Cayman has a leader – also the Minister of Finance – with a gambling problem. Compassion should be shown and it should be recognized. And dealt with…. Cayman can no longer afford it. A wake-up call – some call it an intervention- is what is needed. Cut his salary to 0.00. Get him off the plane until such time as any of his bets pay off not just on the papers, agreements, MOI's he signs but in real terms or he seeks counselling.
Surely You mean our premier IS one of the people at the slot machine!!
Gambling addiction is connected with impulse-control disorder. This illness necessitates chance-taking for instant gratification and pay-off, as opposed to long-term planning for future rewards.
Hey Caymanians,
Has anybody done a thorough research on Philippine Airlines? Does anybody know that they are IASA certified? Do you know that it is the Philippines who is in CAT 2 and not Philippine Airlines?
I doubt that not even 1% of the world knows your airline is existing. You should be thankful enough that that Filipino company will invest in your airline! If our national airline, Garuda would invest in your about-to-fold airline, I wouldn't be pleased.
11/09/2012 – 19;30
If you think thiss is a bad deal, wait till you hear what Mark Scotland has in store for our Health Seavices Association.
Great deal! PAL is great. Airlines needs and lives with capital. SMC has capital. What more to say. Again asian airlines have most of the best
First we get the Philippine Government chastising us and black listing us about treatment of Philippine Nationals working in The Cayman Islands! But instead of them being told that if they are not happy with the way their people are being treated here, [which I think is better than most places they may go] then we should have said to them.
We forced no one to come here! So if they're not happy, and you feel they are being treated unfairly, then please come pick them all up and take them back home. Because there is one thing we don't seem to have a problem with in the Cayman Islands, is getting other foreign nationals to come here to work. But instead of telling them to GO FLY A KITE, we make an apology to them! "What's wrong with these morons we call leaders?
Now we want to have them buy into the only remaining National Company with the name "CAYMAN" on it. "TO DO WHAT" Bring in more unemployed workers from Asia. "WAY TO GO" Big Mac!
If there is anyone in the UDP who has "THE BALLS" and "ANY LOVE FOR OUR ISLAND" please let this man know he's not GOD and that he should stop acting as such!
Of course this won't happen because! "THEY TOO" have "CLEAN HANDS and A PURE HEART".
Five percent in the third year of investment? You know the SMC is not a billion dollar company through stupidity. This simply means the CI Goverment would have to guarantee that return on investment and I very much doubt that CAL will have made even 5% profit in three years. It is a government airline because as a private airline it would not last a week. It is way overstaffed and poorly run, customer service is severely lacking and its costs are way too high.
SMC is smart, they will pump 25 million into a loss making company for a 5% return that will be borne by YOU and ME! This government is absolutely crazy. SMC is smart, they will not even have a controlling interest, so they cannot be held accountable for further losses.
Preferred shares are basically a way of securing a loan. It you think a 5 per cent return in three years time is a bad deal for government, you should probably be someone who runs for election because you'll fit right in with the rest of the current lot.
It's 5% preferred stock so when the airline doesn't make a profit, it doesn't have to pay the 5% right then. BUT the 5% becomes a debt if it is not paid. After a few years, the Filipino company becomes a BIG creditor of CAL in addition to being a big stockholder. This is inevitable because there is zero chance that CAL will ever make a profit, even if the Filipino airline funnels enough passengers through Cayman to fill up all the flights.
Cayman Airlways only has 6 aircrafts, PAL has 40! PAL has 4 brand new Boeing 777-300ERs, Cayman Airways only has 4 Boeing 737-300s! PAL has 64 aircrafts on order all from Airbus. 34 Airbus A321 sharklets, 10 Airbus A321neo, and 20 Airbus A330-300HGW. Plus 2 more Boeing 777-300ERs for delivery. What does Cayman Airways have? None!
What a shame, you guys talk as though your airline is so beautiful but all you have are out of production Boeing 737-300s! PAL had those way back and they phased them all out because they are old! And you are still operating them!
You may have a small island, but if your airline is so great, then why dont you at least operate the new Boeing 737-900ER or why dont you even have orders for Boeing 737-9MAX???
So stop talking shit about us Filipinos because WE ARE BETTER THAN YOU GUYS and WE HAVE A BETTER AIRLINE!!!
Answer: we don’t need those aircrafts for our route structure. Simple. Why take on equipment that you don’t need?? Good news is based on Mac’s record this will not go anywhere and will end up in the dust bin of history like the UDP, thank god.
Do they have standing room as well as sitting on PAL?
"We are better than you guys"? Sometimes it is better to shut up. You are not doing your countrymen any favours with that kind of talk.
At least we have the good sense not to order aircraft we cannot afford.
Good to know that you are aware of PALS fleet inventory.
I too am a Filipino, but never in a million years would I say that I am better than anybody. Saying that you are better than others is egotistical, self centred, ill-mannered and totally contradicts your statement.
We definitely are no better than the Caymanians or we will not be here!!
Your parents ever tought you about humility?
Good deal for Cayman, unfortunate that the Premier is involved, his track record will make it very difficult to move this forward, as most of us will automatically assume the usual Macanomics will have been applied.
The fact is, the idea, born far away in corporate board rooms is a phenomenal opportunity for Cayman Airways and the country.
PAL, is a world-class airline, over 70 years old with an excellent safety record, and a registered IOSA certified operator. Cayman Airways itself was just awarded its own IOSA certification. These certifications are issued by the IATA organization, and are a very detailed test of how airlines operate. (more info at http://en.wikipedia.org/wiki/IATA_Operational_Safety_Audit)
The reason that the owner of PAL is looking for a partnership has nothing to do with the safety record of PAL itself, but more about the inability of the regulatory authority in the Philippines not being compliant with the US/EU standards. As a result of this, airlines under the regulation of this authority cannot expand, or change the airplanes they operate into the US/EU. This of course puts them at a competitive disadvantage. With new airplanes ordered, and not being able to retire old ones, and no control over the inability of the government run regulator to meet the US/EU standards, they (PAL’s owners) have been seeking for outside the box ways to deal with this problem.
The real challenge will be to see if Cayman Airways can actually obtain the necessary approvals from the FCO, and if the Cayman Islands regulator, the CIAA can itself obtain the green light to be able to oversee Cayman Airways operating a large long haul aircraft into the USand EU.
Everyone who loves this country needs to stand up and as one united group and send a loudmessage against this, the craziest of all "investment" proposals! Cayman Airways might not be profitable monetarily but it has an excellent safety record, it meets the FAA standards and has some of the best pilots anywhere. In times of disasterin the past – reference Hurricane Ivan – Cayman Airways was the only airline shuttling people to safety and back home again to rebuild. The fact that this government would even entertain a fleeting thought of aligning CAL, in any way, with an airline that has the reputation of the Filipino airline is beyond crazy and needs to be protested in the loudest possible way! If this government and their Premier is in love with Filipinos then this is the wrong way to express it! As the local saying goes, "Not today BoBo!".
Sad to say, again, thank God England would probably have the last say in this.
Who in their right mind would want to enter your already failing airline into a share agreement with an airline that has a questionable safety record, issues related to terrorism attacks, went bankrupt at least once and cannot meet the FAA requirements? Only the ever so brilliant Caymanian Premier!
I would expect those patriotic Caymanians that love to see the national air airlines succeed would be more than happy to put their money where their mouths are to become stockholders and if they would not be willing to put money into the airline then with the country's financial problems why keep it?
This is all just a smokescreen while Mac signs us up for some other major catastrophe.
We have to accept that he is desperate to accomplish something to brag about, except over tax the country and waste $2 billion with nothing to show for it.
While we are distracted he will tie us up with some other 'better-for-the-country' fiasco.
Maybe the dump in Bodden Town? or Maybe Shetty will build two hospitals instead of one?
or maybe a shiny new oil refinery? or maybe independence?
what a comnination…..
one of the most expensive airlines is partnering with one of the most dangerous…..
welcome to wonderland………..zzzzzzzzzzzz
Worst investment ever.
Everyone in this room having listened to you in now dumber. At no point in your incoherent rambling did you even touch on anything remotely connected to a logical investment. I award you no points and may God have mercy on our soul.
Would not be surprised if majority of the shares are bought by Big Mac himself .First the Dock now Cayman Airways deal that he suddenly wants to have the shares open to the public? Seems very fishy to me MAC….is there even a law against Govenrment officials and there family buying shares from these kinda companies when there are doing deals like these.. Can a F.O.I be used to see the major shareholders……
By now all will have noted that there are more red flags on this deal than in the entire British Navy so I will not bother to repeat all those made to date. Let us look at the bigger picture where Bush is flying around the world like a chicken with it’s head cut off trying to put together more deals. If there is one thing he is incapable of doing, it is trying to put together any deal that is beneficial to the citizens of the Cayman Islands. We all know his track record.
What is more important is that an outgoing Government within the last few months of it’s regime, should not enter into major contracts. The various situations of yesteryear that I recall are the cancellation of the Horter Hospital contract which cost the Government almost one million dollars, the cancellation of the Master Ground Transportation System, the predecessor of the current road in progress to West Bay and the deferred implementation of the tourism recommendations of Coopers and Lybrand which was commissioned in Norman Bodden’s time.
By now the current politicians must recognize that the wishes of the Caymanian people do not coincide with theirs. Thus any sale of a national asset such as Cayman Airways or any deal on the port must be deferred until we have the new and more competent Government in May. More importantly is that it will take six months to put together any deal on either asset as no doubt the mother country will wish to give it’s approval. In other words Mr Bush, you are too late!
Doesn't really matter if there is a law against it if noone enforces it. If the laws were enforced, he wouldn't even be free to buy his shares.
Seriously????!!!!!!!!!!!! This has got to be a year end joke. ….
"However, a leaked document believed to be an outline of the terms of investment that SMC is interested in making suggests that the firm would be looking for a substantial chunk of preference shares, with an agreed dividend starting at 3% in the first year rising to 5% in the third year of its investment. It would then be seeking an option to convert the shares to ordinary ones, which could give the firm as much as 49% of the airline." ….
Reeeealy???? If he thinks that he will go through with this kind of idiotic plan and get away with it then he has another thought coming! This is one idiotic plan that I am willing to hit the streets against with a great many protestors so go ahead KeKe .. try it!
Rubbish. No such thing.
Dear God! Every day, the news of what the Premier and his government is doing becomes more and more frightening. Why in God's name would this man even think of aligning Caymanian Airways with an airline that has the reputation that the Filipino airline has?! Has it ever dawned in some dim area of their minds the negative impact such an association can have? Caymanians, speak up and stand up to put a stop to this madness!
I agree that exploring the possibility of selling shares to local companies and individuals could be a good thing but to first take steps such as Bush has done, with a foreign airline of reportedly questionable reputation is beyond crazy and needs to be stopped!
You couldn't GIVE me shares in Cayman Airways if there is any association with a Filipino airline with a dodgy safety record trying to get into the US, where they are currently banned.
Your comments about Phillipines Airlines being banned in the US couldn't be further from the truth. Phillipines Airlines currently operate B747-400 service into the US. The countries CAA rating fell to category 2, which prohibits ANY and ALL Phillipines operators from expanding service into the US. However, with the B747-400, Phillipines does infact operate into Europe.
The downgrading of the countries CAA has nothing to do with the carrier itself. The carrier cannot add new routes or operate new equipment because of the failings of the CAA.
This is exactly why this works for him. He knows investors looking at this thinks its stupid. So the shares are easy pickings for SMC to get. We can only pray for the UK namely the FCO to step in and ask him what f….. bleep bleep are you trying to do?. How many investigations are you exactly trying to attain?
A Fillipino Airline come on Mac give us a break, you're willing to sell anything Caymanian as long as you'll make a few dollars. Why not sell to a world respected brand such as Virgin, BA or Delta and utilize their market share and airline partnerships that'll benefit Cayman and the national carrier. I would suggest sell 45% to a foreign airline and 55% is locally owned, do more regional flights such as to Costa Rica and also to US west coast and more charters.
This is the best idea yet, more PROPER codesharing with a major airline would be fantastic and we know that there won't be any dodgy accounting or safety record. I would buy some shares if this was being proposed but as it is, I can't see anyone wanting to invest.
CAL loses money like a fish exhales water, and with the accounting track record of the government and the strength of the board of CAL, the reported "small profit" is actually more likley to be a monsterous preposterous fable. Why anyone would buy any part of this cluster xxxx is beyond me.
CAL made a profit! HOGWASH, show me the books; I would have to see this in black and white, I would not doubt Mckeeva is probably taking financial advice from Bernie Madoff.
The board had them making a profit one year when they forgot to put fuel in the budget – this is true.
Sir. Richard Branson; once said ! "Do you know how to turn a billionare into a millionare" ?
Start an airline.
BB
No! No! Noooo! Mac, Please Mac NO! Let the people of Cayman have a say and invest in their own Airline. For once, Listen to Ezzard. The PAL Airline is one of the 10 worse Airlines in the world. They are coming with a hidden agenda and trust me the USA knows their hidden agenda. I would rather keep putting money into our own Airline, than putting the money in to The Turtle Farm. Please keep our National Airline "OURS". Caymanians are an endangered species, we need something we can call our own. We need protection too. Keep our National Airline 100% Caymanian, please.
"Keep our National Airline 100% Caymanian, please."
Sounds like you are one of the ones who gets free rides to Miami.
Your National Airline is only one step above the Turtle Farm financially.
Go Figure.
And what is the hidden agenda? Please enlighten us.
Mckeeva Bush – a man without sense; someone who leads a country into economic failure.
Source: Oxford English Dictionary 2012.
Ooh, can I invest in a loss making state subsidised airline? Please let me, I havetoo much money and I don’t really like it.
Sign me up for a preferred share. Its a guaanteed rate of return. Backed not by CAL but by CIG. So my payout is guaranteed. And if they need to find money to pay the dividend they just raise my taxes. … Uhm, wait, this might need more thought.
Resurrect the Virgin deal! Richard Branson investment would open the door to Europe…. We already have the most filipinos in the Caribbean, this deal provides no extra advantages.
Ain't gonna happen. Richard would immediately cancel all the free flights for the friends of the party in power. That would be good first step into making the airline profitable.
Looking for "preference shares with an agreed dividend starting at 3% in the first year rising to 5% in the third year of its investment" from a company that has lost money every year of its existance. Wow, what another great deal for the people of Cayman and another debt burden on the government. Why don't we just sell them the airline outright, no guarantee of revenue…
Twilight Zone economics. "the airline made a small profit" means after taking the annual $25 million+ subsidy as earned income, there was a small "profit" left unspent. Regarding selling of shares, no one in their right mind would ever invest a dime in an airline that has NEVER made a real profit and is for all practical purposes an extension of the highly inefficient civil service with its culture of entitlement and where nobody can be replaced for incompetence. Another McKeeva Bush brain storm. God help us.
25 million? Wow! What hat did you pull that figure out of? Goodness me!
15 million subsidy and the usual 10 million loss. You add it up.
A few thoughts….
1. Airline business is tough-Bottom Line. It has been that way from the advent of airline deregulation and the ever increasing high price of oil has not help matters either. Question is there has been talk of shares being offered in Cayman Airways (CAL) for years to help raise captial for our very expensive asset to remain operational, but nothing ever materialized. Until now, that a Foreign company owning a foreign carrier with foreign interests wants to invest in CAL, and oh yeah Caymanians can accquire shares too. Numerous individuals with airline backgrounds and experience suggested allowing shares in CAL to be available to the public in the past but it seems to have fell upon deaf ears.
2. How is CAL and/or CIAA/CAA going to "help" Philippine Airlines with such a poor safety record circumvent whatever regulations that currently exist to prevent them rights to operate to and from the US and Europe is beyond me, and without upsetting the FAA and burning up CAL's route rights in the US, and approval to fly into the US period, worse case scenario.
3. Why Phillipines ? Of all the airlines in the world and many more who actually posted profits in the past quarters of such turbulent times, and whose relationship to CAL would prove more beneficial as their operation and target market are very similar to CAL's scope of operations, why would you propose to do business with an airline based 8000nm away in a very different market ?
Seems as if we don't learn from our mistakes especially the most recent cases where foreign investors have not proven to be the saviour they proclaimed to be and when they fail to deliver and move on to the next host the Cayman Islands are left to clean up the garbage and foot the bill. Couple that with our decision maker's poor business and negotiatiing skills and its a receipe for disaster. It'll be such a shame to see a national icon such as Cayman Airways become defunct because of lack of proper insight, and we only need to look across the border a few miles at the closure of Air Jamaica and subsequent rebranding as Caribbean Airlines (formely BWIA of T&T) to witness the cultural and economic repercussions of such action.
Why ? It's because your airline is failing. That is why.Let's be honest, mostof you arent kowledgeable enough to understand that an Airline from the Philippines can actually buy your beloved airline, hell save it.
It might be true that we are looking for ways to expand current routes, but we are not by-passing any regulations here, we comply to them, BUT ofcourse SMC has found ways to open up routes technically or legally.
So, if most of you have real concerns for your airline, then I think this should be welcome news to you.
Keep some , or lose it all. Not mine or your choice anyway so better deal with it.
Who would buy shares in an airline that has never made money??? …that only exists because we dump $20M a year into it- who would do so??? Mac only threw this out because, as usual, he was caught with his hand in the SMC cookie jar…..we have to get rid of this government….please Cayman, ensure you vote these folks out.
Corporations often buy other corporations because it gives them access to something they want or need but cannot get. Often they will buy a losing entity to do so. What they want out of the deal is obviously not a money making addition to their airline but the access to the US.
4- Philippine Airlines
Airline safety records
Most of the incidents which place this airline on the list are related to terrorist incidents with at least three bombings and one hijacking in the airlines history.
Completed flights: 1.18 million
Fatal accidents: 6
Deaths: 107
photo courtesy of Contri on Flickr
Why would anyone want to buy shares in any business that has a proven track record of losing 10 million plus annually?
This is one Caymanian that would not want a share of CAL if it enters into any agreement with SMC or PAL. I would go buy shares in PanAm first and we all know that airline no longer exists, because that is exactly what would happen to CAL.
Maybe, instead of wasting taxpayers money and time discussing this ludicrous venture with a blighted airline, we should have taken the oppurtunity, when Branson was here last week, to offer him 49% of the stock in CAL in exchange for him for him giving us advice on how to properly run an airline.
Yeah!!! Now we can flush our money down the toilet directly rather than government doing it for us!
who in their right mind would invest in a civil service run, loss making CAL?
Yes, and who would invest in an airline where 25 per cent of the cayman islands residents fly free! can someone out there do a FOI query to find out how many travelers on cayman airways flew free in the last few years. Now that would be really interesting!
There is always a huge stack of free tickets in the office. Most (not all) directors and former directors fly free.
Is there anything that our first and worse Premier won't sell? There will be nothing left soon. Have you noticed all his rich friends (Caymanians) have not opened their mouths? The opposition is so timid as if they arn't even their. This tells me there is no ripples of hope with our party system. I feel so bad about our useless leadership and the sheep that follow.
You idiot, there are but few rich Caymanians and I will have you know that the majority of Caymanians, rich and poor, object to this damned fool proposal. His rich "friends" are foreigners who use him for their own personal gain and I don't blame them!
Well I for one can not wait til Ican get to buy some of these preference shares! Why did the Premee go to the Philippines to look for investors though?
So Arden was right afterall. He may have got the exact percentage wrong, but he was right about the premier selling shares in Cayman Airways, & to think that the speaker made him apologise! Apologise for what?
But wait! Did McKeeva Bush not in the House of Assembly flip his lid and TELL Madam Speaker to tell East End MLA Arden McLean to apologise and withdraw his statement, when the member from East End said that McKeeva Bush was in the Phillipines trying to sell 50% of Cayman Airways to a group there. Well this seems to be backing up the member from East End's claim and Madam Speaker is obviously in over her head and even said that she cannot believe what is written in the Compass as proof! My Lawd, what a mess we in!
It seems to me that the brains of the elected government are as shallow as a sheet of paper. They have no ability to negotiate and calls any deal a good deal as long as there is some money to be had. Look at Cohen & Cohen deal; look at the Turtle Farm deal; look at the Port deal; look at the For Cayman Alliance deal. In every case, the other party gets exactly what they want and government gets the shaft. It seems anyone can offer them any crap and they prance up and down and say it is a good deal. According to what I see in that proposal, it looks to me that SMC in a defacto way gains control of the National Airline, even though they purportedly have no voting rights for three years and then after that, they have the outright ability at their sole discretion, to acquire common stock and control of Cayman Airways.
UDP, I for sure have no faith in your ability to do anything in the best interest of our country and when you say something is a good deal, I cringe in fear because I do not believe what you say based soley on your track record. Please I beg you, until May next year, leave well enough alone. You have done enough damage and cost this island enough expense, please don't make anymore blunders between now and then.
Signed: Caymanian to the core.
Why do so many Caymanians want to tolerate this regime until May next year? What are we missing?!?!?
What you are missing is that we have no choice. The only way that the Government can be removed before next May is by some of the UDP MLA's voting with the Opposition in a vote of "no confidence" The Opposition has brought two of these to the house and the UDP MLA's keep Mac in as Premier and the UDP ministers in Cabinet.
Okeydokeyfinethen.
I will never invest in CAL until the point where our Premier is no longer involved in it, nor can affect it in any manner whatsoever; much as I like to invest in the workings of my country, my dollars are too precious to be tossed away, vulnerable to the whims of Mr. Premier.
I don't trust you, Sir. I don't trust what you will do, but of course, my few dollars won't make a difference one way or another. Such is the angst of those without iron who fund your lifestyle.
This is very exciting news. Caymanians can now invest in Cayman Airways, a company that has never, ever, made a profit. Have I , as an over the hill accountant, missed something here?
A hill? or a mountain? Sorry Chris I just couldnt resist…
I always agree with you anyway, so dont worry, going downhill is a much easier ride than going uphill since you have accumulated the experience.
Been there, doing that myself…
This is just a tricky way to give ownership to SMC. They will say they are giving Caymanian chance to own CAL. Just a tricky way to give SMC it. Nothing to do with giving us ANYTHING.
It's simple Maconomics, Chris. Surely you know by now that the outcome doesn't matter so long as money changes hands in large sums at the outset? THAT's doing business Mac-style. He doesn't bother with plans. objectives, feasibility studies, or indeed reality, he just tries to do a deal for the sake of doing deals.
So this company wants to buy shares in a Company that is essentially insolvent? A review of the Ownership Agreement on the Government's website shows that Cayman Airways owe more money than the value of the assets it owns (ask the previous owners of the Ritz how that works out in the end).
On profitability, it is the same smoke and mirrors trick that brought the claim that the HSA is now profitable, Government has increased the level of subsidy to unprecedented levels for these two Statutory Authorities, which they in turn count as revenue and now claim to be profitable.
The profitability was not achieved through any cost reduction or other effiency measures, it is simply taxes from you and I being pumped into them to trick the residents that they are turning operations around.
You can fool some of the people some of the time, but you can't fool all the people all the time.
The US Govt has informed CAL that they will not allow the San Miguel Corporation to bypass their regulations in this way and the deal is now dead, so MR Bush is once again spinning in circles and trying to make something out of nothing.
Resign Premier before you take us all down with you.
I sure hope you are right. What a crock ,Fri, 11/09/2012 – 18:27
Take heart people of the Cayman Islands, there have been so many things he has done that might worry you, but this is so stupid that you might have grounds to get him certified. That means you can call the men in white coats and have him put away. There is however a problem, you need to hurry, because the RCIPS might get him first, then he only ends up in Northwood where the sentence would be defined, ie he willeventually get out, whereas, if he is certified, it could mean forever. Hurry!
Who is hanling the share holders monies. Treasury? Monetory authority?
Explain.
"Who is hanling the share holders monies. Treasury? Monetory authority?"
The answer is easy, McKeeva. He is a financial expert. Trust him.
Muckeeva had also promised that shares in CHEC's port upland development would be available to the public in an effort to impress and smoke screen us at the same time. Not working this time!