CAL seeks new Govt bailout…Fuel surcharge on tickets, removal of inter-island airbridge subsidy also under review by Finance Ministry

2026-03-29 - 01:25

Consultant Editor – Investigations Caribbean Airlines (CAL) is seeking a financial bailout from the Government to counter the rising cost of fuel as a result of the US/Israel war against Iran and its impact on the carrier’s operational costs. Guardian Media understands the CAL board put forward several options to the Ministry of Finance during a meeting two weeks ago to cushion the airline- the introduction of a fuel surcharge on tickets, the removal of the subsidy on the airbridge, an increase in the overall cost of tickets and a further slashing of lower revenue routes. However, CAL is also seeking further financial support from the State, which sources say could come in the form of a billion-dollar debt write-off. And according to the 2026 budget document, Details of Estimates of Recurrent Expenditure, dated March 25, 2026, the Government has allocated $626.84 million for the principal repayment on the CAL’s local loans. That sum is triple the revised allocation for principal repayment of $200.8 million in fiscal 2025. As a last resort, without any support, there is the possibility of shutting down the airline. Guardian Media understands there is a division of opinion on the board about the airline’s viability. While CAL’s chair, Reyna Kowlessar, is pushing to get further State support to realign the airline’s business model, at least two directors believe it should either be shut down or sold. Across the world, airlines are grappling with higher fuel costs, with several airlines already introducing fuel surcharges, raising fares and rationalising routes. The fuel surcharge, Guardian Media understands, would follow several international airlines such as British Airways, Air France-KLM, Emirates, Singapore Airlines and Qatar Airways that already have one in place. CAL is a billion-dollar foreign exchange-earning company with tentacles throughout the region and North America. However, it has been hamstrung by its debt and lack of financial audits. The airline has not published financial audits for the last eight years, in breach of its statutory obligations, which affects its ability to raise money without State support. Over the years, the company has published management statements which give an indication as to its performance, but the statutory breach is on actual audited statements. Despite this, Finance Minister Davendranath Tancoo said his predecessor had “repeatedly approved financing for CAL in 2017, 2018, 2019, and as recently as March 2025 to cover operational pressures,” ignoring the lack of transparency. During his budget contribution last year, Tancoo accused the former administration of presiding over “criminal negligence” at the airline after he revealed that CAL spent more than $60 million on audits with international firms EY and PriceWaterhouseCoopers (PwC), yet failed to submit a single audited financial statement for over nine years. The government has acted as guarantor of four loans for CAL: a US$75 million loan ($504,455,772.11) from First Citizens, a US$55 million loan from First Citizens, a $436 million loan from Ansa Merchant Bank and a $443 million loan from Ansa Merchant Bank. Guardian Media understands that these loans have been repeatedly refinanced over the years. Last year, Minister of Transport and Civil Aviation Eli Zakour took issue with the Airports Authority of T&T (AATT) writing off a $205 million debt owed by CAL as the state entity was struggling to meet its own expenses. JetPak Re-evaluation As part of re-evaluating its business model, last month CAL commissioned PWC- at a cost of $268,000 – to do a valuation of its courier service, JetPak. Last week, CAL’s general manager of cargo and new business, Marklan Mosely, resigned. Mosely’s resignation takes the number of executive managers leaving the company to eight in the last eight months. Former corporate communications executive manager Dionne Ligoure was the first to leave in August 2025. She was followed by chief executive Garvin Medera, who resigned in October 2025. In a matter of weeks, Chief Financial Officer Varuna Kuarsingh, Chief Commercial Officer Martin Aeberli, Corporate Secretary Nalini Lalla and General Manager Procurement Arlene Hunt followed suit. Last month, Chief Information Officer Jeremy Mohammed also resigned. Not only did the exit of eight senior officers from the airline remove a layer of management, but also a layer of institutional knowledge from the organisation. Last August, Prime Minister Kamla Persad-Bissessar said that CAL did not operate a single profitable route and had warned the airline’s management that they had two years to fix the company’s finances or face dismissal. “I am giving the management of Caribbean Airlines two years, max. They have to sort out the mess, otherwise, everyone there will be looking for a new job.... Your future is in your hands,” she had said at a Monday night forum meeting. “No longer will we accept taxes paid by ordinary citizens, paid by teachers, paid by policemen, small enterprises ... to upkeep CAL,” the Prime Minister further warned as she accused management of receiving “large salaries for ... failing in their jobs.” ‘Fuel surcharge inevitable’ Informed sources told Guardian Media that a fuel surcharge is almost an inevitable possibility for the airline. While the airline has struggled through financial turbulence several times, especially during the COVID years, CAL’s most pressing cost now is its rising fuel bill, causing it to spend more operationally than it is earning at this point. Though higher energy prices, as a result of the United States and Israel’s war with Iran, may augur well for the country’s coffers, the knock-on effect for CAL is that it’s costing more for aviation fuel, which it purchases at market rates from different ports of the various routes it services. In addition to aviation fuel, CAL’s operational expenses include employee costs, lease of aircraft, maintenance, passenger expenses, marketing and commissions. When CAL was established in 2007, apart from having a clean balance sheet, it had benefited from a government-supported US$50 a barrel fuel hedge to stabilise costs against volatile oil prices. It was removed in 2013 after costing the State $300 million. With no buffer in place, CAL has no option but to implement the charge on customers. Airbridge For fiscal 2026, CAL has been allocated $70 million from the Ministry of Finance, according to the budget documents. That sum is the subsidy paid to CAL to service the airbridge between Trinidad and Tobago. In 2025, CAL received the same amount of $70 million, in 2024, CAL received $73 million, in 2023, the subsidy was $85.6 million, while in 2022 it was $95 million. The reduced annual allocation by the State was a result of increasing the cost of tickets on the airbridge in January 2023. The two-way fare, which was $300, was increased by $100 to $400. “Revenues from international travel are used to subsidise the inter-island air bridge. Additionally, the rise in global energy commodity prices has resulted in higher operational costs for both the inter-island airbridge and seabridge. In this regard and consistent with our overall policy of sharing the burden of the cost of transport, I propose to increase the cost of inter-island air travel for all tickets by $50.00,” then finance minister Colm Imbert had said at the time. “The estimated increase in annual revenue to Caribbean Airlines for the operation of the airbridge will be $50 million, which, with this increased price, will still require subsidies of the airbridge of over $50 million per year,” Imbert added. In August 2022, CAL issued a release which stated that its domestic operation was characterised by consistent losses (US$9.6 million as at June 2022) and other critical variables, such as subsidised flights, high operating costs and low prices, which do not reflect actual market value and one-way peak demand periods outside of the July-August school holiday period. The airline said as at June 2022, its total operational costs for the airbridge stood at US$18.7 million, while the cost per flight hour was US$17,306. It noted that the high costs were driven by the frequency of flights and the short distance (52 miles), leading to an undesirable low block hour utilisation of aircraft, crews and maintenance costs. “Nonetheless, the domestic schedule (inclusive of peak travel periods) considers the essential nature of the service, events and activities in Tobago, the total number of passengers over a 12-month period and other information relevant to its operation,” the airline added. It said that in terms of passenger and flight details, for the period July 17, 2021, to July 31, 2022, the airline operated 6,527 flights carrying 416,780 passengers. “Caribbean Airlines is mindful of the need to have an effective airbridge between Trinidad and Tobago and the company continues to closely manage the same, bearing in mind the considerable constraints outlined above,” it had said. Changes already underway at CAL On October 13, 2025 when CAL announced its new acting chief executive, Nirmala Ramai, the company said the board and senior leadership team would be focusing on five key initiatives: supporting employees and stakeholders with open communication and care; reviewing operations to increase efficiency and modernisation; enhancing the customer experience with improved services; developing a long-term, financially responsible and sustainable growth plan; and conducting full and thorough audits of all departments and processes, to strengthen governance, safety, and accountability. The airline also put up two of its ATRs for sale and it plans to welcome three additional Boeing 737 MAX 8 within the next 12 months. In January, CAL also put in motion changes to the airline as part of its ongoing network optimisation programme. It discontinued service to Tortola, British Virgin Islands and San Juan, Puerto Rico routes following what the airline said were comprehensive evaluations of route performance and resource deployment. It also announced it would restructure its Barbados hub from February 2026, with aircraft and crew to be transitioned to operate from Trinidad. In November 2025, CAL discontinued flights between Fort Lauderdale, Florida and Montego Bay and Kingston in Jamaica due to poor performance. “These changes form a critical part of our plan to deliver reliable service while managing our resources responsibly. Our customers remain our priority, and these adjustments ensure we continue to provide strong regional connectivity, supported by a sustainable and competitive operational model,” Ramai had said. Guardian Media sent questions to Ramai last week, but she neither acknowledged nor answered those questions. CAL’s turbulent years For Caribbean Airlines (CAL), profitability has been as cyclical as the aviation business. While it has posted some profits on paper between 2009 and 2019, these were outweighed by its mammoth billion-dollar debt. In the course of the company’s operations, it accumulated losses of US$454 million ($3 billion), according to its 2020 management accounts. CAL started operations on January 1, 2007, capitalised with US$100 million ($677 million). A clean balance sheet, a leaner flight schedule, subsidised fuel with a fuel hedge set at US$50 and a smaller staff were key to its initial success. However, several bad investments over the years resulted in over $1 billion in losses. In 2021, after the airline suffered financial losses because T&T closed its borders during the pandemic, it had to retrench workers. CAL cut a total of 280 jobs, including 79 pilots, in a bid to streamline its operations. The company subsequently issued a release explaining that the job cuts were fewer than the projected 450 jobs it had intended to sever when the restructuring exercise began. Then finance minister Colm Imbert had pegged the severance costs at $110 million to be paid by the T&T taxpayers, as there would be no input from CAL’s minority party, Jamaica. In 2020, with the COVID-19 pandemic, the airline made a loss of US$103 million.