CAL severance payments to cost $110m

IT WILL cost tax-payers roughly $110 million to pay the 450 Caribbean Airlines (CAL) workers set to be retrenched as part of the State airline's restructuring plan.

The cost was revealed by Finance Minister Colm Imbert as he responded to an urgent question from Opposition Senator Wade Mark on Tuesday.

Imbert also said the airline will be reducing its fleet to 13 aircraft but did not state how much of this would be for the domestic airbridge and how much for CAL's international routes.

He said CAL does not have the money on its own to pay the severance to the workers set to be retrenched.

“Therefore the severance payments will be financed by the Ministry of Finance. The estimate given at this time, subject to finalisation, is in the vicinity of $110 million.” He said support systems would be put in place for retrenched workers and their families.

“These would include counselling services for employees and their families through the Employee Assistance Programme, outplacement services to be co-ordinated with external recruiting agencies and the Ministry of Labour and transition training with respect to career guidance and support and financial management, in addition to the compensation packages employees would be entitled to upon separation.”

He said the reduction in fleet size to 13 aircraft, including eight jets and five ATR turboprops, was done on the advice of the International Air Transport Association (IATA) and external consultants, Amadeus.

“CAL has advised the Finance Ministry that passenger demand, as projected by IATA and Amadeus, will decrease in the short to medium term. I am advised that traffic is expected to return to pre-covid19 levels in or around 2023.

“When the borders are reopened, CAL will have a reduced jet fleet and a reduced ATR fleet and will therefore service fewer routes than pre-covid19. Any separation of workers is directly as a consequence of the reduction in the fleet and the reduction in the routes."

He assured that notwithstanding the reduction in the size of the airline, the routes that will be operated will be done at the highest levels of safety and service.

According to the Planespotters.net – an online database about commercial aviation – CAL’s fleet size is currently 17, composed of seven ATRs and ten Boeing 737s. Of these, one ATR and four 737s are noted as being "parked."

Imbert said CAL had been advised that due to the projections for reduced air traffic, even when the pandemic is over, the reduced fleet will be adequate to manage any passenger demand.