PRESENTATION TO PARLIAMENT

BY

THE HON. BRADLEY B. ROBERTS, M.P.
MINISTER OF WORKS AND UTILITIES
AND BAHAMASAIR

IN SUPPORT OF THE RESOLUTION

FOR

A GOVERNMENT GUARANTEE
OF
A $3.4M LOAN FOR BAHAMASAIR
 SCOTIA BANK (BAHAMAS) LTD.

NOVEMBER 25, 2004
 
 
 
 
 
 

MR. SPEAKER, IT GIVES ME GREAT PLEASURE ONCE AGAIN TO RISE ON BEHALF OF THE WONDERFUL CONSTITUENTS OF BAIN AND GRANTS TOWN, ON THIS OCCASION TO SECOND THE RESOLUTION FOR THE GOVERNMENT TO PROVIDE A LOAN GUARANTEE TO SCOTIABANK AS SECURITY WITH RESPECT TO THE ACQUISITION OF TWO BOEING 737-200 AIRCRAFT FOR SUM OF US$3.4M.

MR. SPEAKER, BAHAMASAIR WILL ALSO TODAY ACHIEVE YET ANOTHER MILESTONE IN ITS THIRTY ONE YEAR HISTORY AS I SHALL LAY ON THE TABLE OF THE HOUSE THE FIRST EVER ANNUAL REPORT FOR BAHAMASAIR CONTAINING THE 2003 / 2004 FINANCIAL STATEMENTS ALONG WITH A REPORT OF ITS OPERATIONS COVERING THAT PERIOD.

MR. SPEAKER, FOR A LONG LONG TIME NO FINANCIAL AUDITED STATEMENTS FOR BAHAMASAIR WERE TABLED IN THIS HONOURABLE HOUSE  WHICH BROUGHT THE AIRLINE UNDER TREMENDOUS CRITICISM.  AUDITED FINANCIAL STATEMENTS  WERE TABLED YEARS AFTER THE CLOSE OF THE RESPECTIVE FISCAL YEAR.  YESTERDAY MORNING, MR. SPEAKER, MY GOVERNMENT TABLED NOT ONLY THE COMPLETE AUDITED FINANCIAL STATEMENTS IN JUST 5 MONTHS AFTER CLOSE OF THE LAST FISCAL YEAR BUT ALSO AN ANNUAL REPORT REPLETE WITH A SUMMARY OF OPERATIONS OVER THE PAST YEAR AND OTHER PERTINENT INDUSTRY AND BAHAMASAIR SPECIFIC INFORMATION.  I WISH TO POINT OUT THAT THERE WERE SEVERAL TYPOGRAPHICAL ERRORS IN THE FIRST FIFTY REPORTS THAT WERE PRINTED.  THE CORRECTIONS WILL BE MADE AND MEMBERS WILL BE SUPPLIED WITH THE CORRECTED COPIES.

THIS IS A GREAT ACHIEVEMENT MR. SPEAKER AND I TAKE THIS OPPORTUNITY TO ONCE AGAIN COMMEND THE EXTRAORDINARY WORK BEING DONE BY THE BOARD AND MANAGEMENT OF BAHAMASAIR WHO INCIDENTALLY MR. SPEAKER ARE ALL BAHAMIANS.   I SALUTE THEM FOR THE SUCCESS OF THE PAST FISCAL PERIOD.  THEY PUT IN MANY LONG HOURS TO ACHIEVE THESE POSITIVE RESULTS (NAME DIRECTORS AND SENIOR EXECUTIVES)

MR. SPEAKER, THERE IS NO DOUBT IN MY MIND THAT HISTORY WILL RECORD THE 2003/2004 FISCAL YEAR AS HAVING BEEN THE YEAR THAT BAHAMASAIR REALIZED THE MOST IMPRESSIVE IMPROVEMENT YEAR OVER YEAR HAVING REDUCED ITS LOSSES FROM $27.5 MILLION TO $11.4 MILLION AN ALMOST 60% IMPROVEMENT;   (REDUCTION OF $16.1 MILLION).  THIS LOSS IS INCLUSIVE OF $800,000 ASSOCIATED WITH THE AAAW INDUSTRIAL ACTION IN NOVEMBER OF 2003.   MR. SPEAKER I AM ABSOLUTELY ELATED BY THIS STELLAR PERFORMANCE AND FRANKLY THIS BOARD AND MANAGEMENT HAVE EXCEEDED EVEN BY LOFTY EXPECTATIONS FOR THE AIRLINE.

MR. SPEAKER, I SAY TO THEM ON BEHALF OF THE BAHAMIAN PEOPLE INCLUDING OUR DETRACTORS, CONGRATULATIONS AND WELL DONE.
MR. SPEAKER REVENUES GREW BY $3 MILLION WHILE EXPENSES FELL BY $13.3 MILLION.

THE REVENUE GROWTH WAS PRIMARILY ATTRIBUTED TO THE INCREMENTAL SALES GENERATED FROM THE DRIFTWOOD “SEAT GUARANTEE” SERVICE BETWEEN FREEPORT AND FLORIDA GATEWAYS AND GROWTH IN CHARTER BUSINESS.

MR. SPEAKER I MIGHT INTERJECT HERE THAT WHILE THE DRIFTWOOD FLYING PROGRAM IS FAIRLY LOW YIELD BUSINESS, THAT BY AND LARGE IS THE ORDER OF THE DAY.  LOW COST CARRIERS HAVE DRIVEN DOWN FARES PERMANENTLY AND IT IS SIMPLY FOOLHARDY FOR ANYONE TO ASSUME IN THESE TIMES THAT YOU CAN ENTER A MARKET “COLD” AND EKE OUT A PROFITABLE MARKET SHARE  IT IS.  IT JUST DOES NOT HAPPEN ANYMORE.

 IT WAS REPORTED IN THE WEEKEND MIAMI HERALD THAT AMERICAN AIRLINES HAVE HAD TO REDUCE THEIR WALK-UP FARE ON THEIR MIAMI/WASHINGTON ROUTE FROM $712 TO $109.  MR. SPEAKER THIS IS AN 85% REDUCTION IN ONE FELT SWOOP.

SCARY, MR. SPEAKER.    THE LEGACY CARRIERS LIKE BAHAMASAIR WHO HAVE OPERATED UNDER THE OLD HUB AND SPOKE PARADIGM ARE STUNNINGLY COMING TO THE REALIZATION THAT THAT BUSINESS MODEL IS DEAD.  LIKE THE OTHER LEGACY CARRIERS, BAHAMASAIR MUST FIND WAYS TO TRANSFORM ITSELF INTO A LOW COST CARRIER OR THE GOVERNMENT MUST FIND A VIABLE ALTERNATIVE IN ORDER TO ALWAYS HAVE AN AIRLIFT VEHICLE TO FACILITATE TOURISM OUR PRIMARY INDUSTRY. THE OBJECTIVE BEING TO MANAGE SEAT CAPACITY AND COMPETETIVE FARES INTO OUR DESTINATION.

MR. SPEAKER, I AM  OBLIGED TO BRING STONGLY TO THIS PARLIAMENT AND THE BAHAMIAN PEOPLE’S ATTENTION THAT BECAUSE OF UNFAVOURABLE STAFF WORK RULES AND HIGH BENEFITS BUILT UP OVER ITS 31-YEAR HISTORY, BAHAMASAIR’S COST PER SEAT MILE (CASM) IS FOUR TIMES HIGHER THAN THAT OF THE TYPICAL LOW COST CARIER (INCLUSIVE OF JET BLUE SPIRIT, AIRTRAN, SOUTH WEST, DELTA SONG, TED AND MANY OTHERS) THEREBY MAKING BAHAMASAIR  TOTALLY UNCOMPETITIVE IN TODAY’S AIRLINE ENVIRONMENT.   IN OTHER WORDS MR. SPEAKER FOR EACH MILE BAHAMASAIR FLIES A SEAT, IT COSTS IT ABOUT .28¢ PER MILE WHEREAS FOR ITS LOW COST COMPETITORS IT IS ABOUT .7¢ PER MILE.  BAHAMASAIR’S COST HAS GOT TO COME DOWN.   I AM CONFIDENT MR. SPEAKER THAT THE BOARD AND MANAGEMENT WILL DEVISE ACCEPTABLE EXPENSE REDUCTION INITIATIVES INCLUDING STAFF CONCESSIONS TO ACCOMPLISH THIS.

ON THE EXPENSE SIDE OF THE INCOME STATEMENT MR. SPEAKER  WE WERE ABLE TO REDUCE  EXPENSES BY APPROXIMATELY $13 MILLION INCLUDING A REDUCTION IN DEPRECIATION OF $8 MILLION AND A WRITE BACK IN INTEREST COST OF $1 MILLION.  IN CONTRAST HOWEVER THE PRICE OF FUEL WENT UP BY $1.6 MILLION, AIRCRAFT TURNAROUND COST BY $1 MILLION,  BAD DEBT BY $.6 MILLION AND INTEREST AND PENALTIES BY $.3 MILLION.  WHILE THIS NET EXPENSE IMPROVEMENT OF $13 MILLION IS VERY GOOD, IT IS NOT ENOUGH GIVEN THE DOWNWARD TREND IN FARES AND THE RISING PRICE OF FUEL.
 

MR. SPEAKER, CONCURRENT WITH ACHIEVING THESE OUTSTANDING FINANCIAL RESULTS, THE AIRLINE WAS ALSO ABLE TO MODERNIZE THEIR TECHNOLOGY BY INTRODUCING E-TICKETING AND ON-LINE BOOKING FOR PASSENGERS AND TRAVEL AGENTS.  MR. SPEAKER THE PUBLIC SHOULD BE AWARE THAT THEY CAN NOW BOOK ON BAHAMASAIR FROM THE COMFORT OF THEIR HOMES AND OFFICES.  THE “ON TIME PERFORMANCE” CONTINUES TO BE WELL OVER THE INDUSTRY STANDARD WHICH IS SO CRITICAL TO CODE SHARE ARRANGEMENTS AND OPERATING IN THE TOURIST MARKET.  YOU WOULD ALSO BE PLEASED TO KNOW MR. SPEAKER THAT THE ANNUAL SUBSIDY HAS BEEN STEADILY FALLING SINCE MY GOVERNMENT TOOK OFFICE HAVING COME DOWN FROM $20.6 MILLION IN 2003 TO $16.0 MILLION IN 2004 AND IS NOT EXPECTED TO EXCEED $13 MILLION IN 2005.
 
MR. SPEAKER, THE AIRLINE INDUSTRY WILL LOSE UPWARDS OF $5 BILLION DOLLARS THIS YEAR DUE PRIMARILY TO DOWNWARD FARE PRESSURE PERPETUATED BY LOW COST CARRIERS AND ESCALATING PRICE OF FUEL.  ALL LEGACY CARRIERS INCLUDING BAHAMASAIR MR. SPEAKER MUST AGGRESSIVELY ADDRESS THEIR HIGH COST OF OPERATIONS OR FACE EXTINCTION.  THE GIANTS OF THE U.S. AIRLINE INDUSTRY ARE EITHER ON THEIR BACKS OR STRUGGLING TO BARELY REMAIN STANDING.  I SPEAK OF NO LESS THAN AMERICAN AIRLINES, DELTA, UNITED AND U.S. AIRWAYS.  THIS IS SERIOUS MR. SPEAKER.  ACCORDING TO AIR TRANSPORT ASSOCIATION OF AMERICA, INC. MR. SPEAKER WHILE REVENUES ARE STEADILY RETURNING TO 2001 LEVELS IN THE AVIATION INDUSTRY DUE TO LOW FARES, YIELD IS STATIC OR DECLINING CAUSING AIRLINES, PARTICULARLY THE LEGACY CARRIERS TO LOSE EVEN MORE MONEY AS THEY ATTEMPT TO PRICE COMPETE.

MR. SPEAKER, A LITTLE CLOSER TO HOME, I READ LAST MONTH IN JAMAICA’S LEADING DAILY NEWSPAPER, THE GLEANER THAT AIR JAMAICA HAS DEVISED A PLAN TO REDUCE COST BY $50 MILLION WITH $25 MILLION COMING FROM STAFF SALARIES AND BENEFITS ESPECIALLY THE PILOTS WHO THEY CLAIM ARE “SOME OF THE HIGHEST PAID IN THE INDUSTRY”.

MR. SPEAKER, TUESDAY’S EDITION OF  THE JAMACIAN GLEANER NEWSPAPER CARRIED THE STORY UNDER THE HEADLINE:  I LOST MY INVESTMENT IN AIR JAMAICA, SAYS GORDON BUTCH STEWART
“I HAVE LOST MY INVESTMENT ALREADY”, MR. STEWART SAID.  “I HAVE LOST US$25 MILLION.”

THE AIR JAMAICA ACQUISITION GROUP, IN WHICH MR. STEWART WAS THE LEAD SHAREHOLDER, ACQUIRED 70 PERCENT OF THE AIRLINE IN 1994.  THE AJAG GROUP WAS TO HAVE PAID US$26.3 MILLION FOR ITS HOLDLING, LEAVING THE GOVERNMENT WITH 25 PERCENT OF THE SHARES, AND THE STAFF WITH FIVE PERCENT.  THE JAMACIAN PARLIAMENT PUBLIC ACCOUNTS COMMITTEE REVEALED ON NOVEMBER 2ND THAT AIR JAMAICA OWED JA$14 BILLION IN TAXES, INCLUDING JA$1.9 BILLION TO THE AIRPORT AUTHORITY WHICH OPERATES THE NORMAN MANLEY INTERNATIONAL AIRPORT.  INFORMATION MINISTER BURCHELL WHITEMAN HAS SINCE DISCLOSED THAT THE AIRLINE LOST MORE THAN JA$34 BILLION SINCE IT WAS PRIVATIZED.
“NONE OF US GOES INTO BUSINESS TO LOSE MONEY,” MR. STEWART SAID.  “I AM THERE DOING THE NATIONAL SERVICE.”

THE ARTICLE CONTINUES THAT THE ROLE THAT AIR JAMAICA PLAYS IS CRITICAL BECAUSE WITHOUT IT, “YOU WOULD HAVE LITERALLY A BANKRUPT TOURIST INDUSTRY,” HE SAID.  THIS IS BECAUSE THE AIRLINE DEVELOPS MARKETS AND SPURS OTHER ALIRLINES TO DEVELOP NEW ROUTES TO THE ISLAND.

“WHO WOULD BELIEVE YOU WOULD HAVE DAILY FLIGHTS FROM JAMAICA TO LONDON?”  HE SAID.  “IT IS AIR JAMAICA THAT IS UP THERE MAKING IT WORK.”  THE AIRLINE MAY LOSE MONEY, BUT IT UNDERPINS MUCH OF THE COUNTRY’S TOURISM PROSPECTS, HE SAID, ADDING THAT EFFORTS ARE BEING MADE TO BRING THE FINANCIAL PROBLEMS UNDER CONTROL.

THE AIRLINE REQUIRES CLOSE TO US$120 MILLION OVER THE NEXT FIVE YEARS TO KEEP IT FLYING, SAID THE CHIEF EXECUTIVE OFFICER, CHRIS ZACCA.

 MR. SPEAKER, BEFORE REVERTING TO THE LOAN GUARANTEE I WOULD LIKE TO SPEAK TO TWO MATTERS I ADDRESSED AT A ROTARY LUNCHEON LAST MONTH.  FIRSTLY, THE MATTER INVOLVING A $0.13¢ REFUELING FEE WHICH SHELL BAHAMAS AND ITS CONSORTIUM PARTNERS, ESSO AND TEXACO HAVE BEEN ASSSESSING BAHAMASAIR FOR SOME SEVEN YEARS NOW EVEN THOUGH THE AIRLINE HAS CONTINUALLY REFUTED THE FEE.  MR. SPEAKER INVESTIGATION INTO THE MATTER HAS REVEALED THAT THIS FEE HAS ITS GENESIS IN THE CONSTRUCTION OF A HYDRANT SYSTEM AT THE NASSAU INTERNATIONAL AIRPORT.

I AM ADVISED THAT BAHAMASAIR NEVER USED THIS HYDRANT SYSTEM AND INDEED THE PHASE OF THIS SYSTEM THAT WOULD HAVE RENDERED IT ACCESSIBLE BY BAHAMASAIR WAS NEVER EVEN CONSTRUCTED.

I AM FURTHER ADVISED THAT BAHAMASAIR NEVER EVEN SIGNED THE PROPOSED CONTRACT COVERING THIS FEE.  MY VIEW MR. SPEAKER IS THEREFORE THAT SINCE BAHAMASAIR HAS NEVER USED THIS HYDRANT SYSTEM AND ARE UNDER NO CONTRACTUAL OR LEGAL OBLIGATION TO PAY THIS FEE, BAHAMASAIR SHOULD CEASE AND DESIST FROM PAYING IT AND EXERCISE ALL MEANS AVAILABLE TO IT TO RECOVER SUCH FEES PAID IN THE PAST.

THE SECOND MATTER MR. SPEAKER CONCERNS CONCESSIONS FROM THE STAFF OF BAHAMASAIR UNION AND NON UNION STAFF.  AS I INDICATED EARLIER THERE HAS BEEN A TREMENDOUS SHIFT IN THE WAY AIRLINES DO BUSINESS AND WE LIKE THE OTHER LEGACY CARRIERS ARE NOT STRUCTURALLY POSITIONED TO COMPETE IN THE NEW ENVIRONMENT.  BASED ON THE LAST FORECAST FROM MANAGEMENT UNLESS WE ACT SWIFTLY TO INSTITUTE INNOVATIVE REVENUE GENERATION INITIATIVES AND SECURE STAFF CONCESSIONS BAHAMASAIR COULD LOSE AS MUCH AS $22 MILLION THIS FISCAL YEAR.

MR. SPEAKER, THE OPERATIONS OF BAHAMASAIR HAS BEEN ADVERSELY AFFECTED FOLLOWING THE PASSAGE OF TWO MAJOR HURRICANES.   DRIFTWOOD HOTELS IN GRAND BAHAMA SUFFERED SERIOUS HURRICANE DAMAGE AND WERE FORCED TO CLOSE. THE ANTICIPATED REVENUE  FROM THE DRIFTWOOD “SEAT GUARANTEE” SERVICE BETWEEN FREEPORT AND FLORIDA AND THE EXPANSION OF THAT PROGRAMME HAVE BEEN LOST.   FURTHER, REVENUE FROM FREEPORT DECLINED  DUE TO THE RESTRICTIVE HOURS OF TRAVEL BECAUSE OF HURRICANE DAMAGE TO NAVIGATIONAL AIDS AT FREEPORT INTERNATIONAL AIRPORT.

MR. SPEAKER, THIS WOULD MEAN THAT WE WOULD ESSENTIALLY RETURN TO THE $20+ MILLION LOSS YEARS FOR BAHAMASAIR.  THIS IS SIMPLY UNACCEPTABLE. THE BAHAMAS GOVERNMENT OR MORE SPECIFICALLY THE TAX PAYER CAN NO LONGER AFFORD THIS LEVEL OF FINANCIAL SUPPORT FOR THE NATIONAL FLAG CARRIER PARTICULARLY WHEN THERE IS SHELTER AND OTHER BASIC NECESSITIES TO BE FUNDED IN VARIOUS ISLANDS IN THE AFTERMATH OF HURRICANES FRANCES AND JEANNE.

MR. SPEAKER, IN KEEPING WITH ITS CAMPAIGN PROMISE, MY GOVERNMENT IS DETERMINED TO REDUCE THE LOSSES AT BAHAMASAIR AND PRIVATIZE THE AIRLINE BY JULY, 2005.  THE GOVERNMENT WILL CONTINUE TO SUPPORT THE BOARD AND MANAGEMENT OF BAHAMASAIR IN THEIR EFFORTS TO ACHIEVE THESE AND THEIR OTHER OBJECTIVES IN FULFILING THE GOVERNMENT’S MANDATE.

RETURNING TO THE LOAN GUARANTEE MR. SPEAKER BAHAMASAIR HAS ACQUIRED TWO ADDITIONAL FULLY COMPATIBLE 1981/82 737-200 ADVANCED JT8D-17 AIRCRAFT FROM THE AAR CORPORATION TO FURTHER PROFITABLY EXPAND ITS INTERNATIONAL MISSION AND TO PROVIDE BACK UP FOR THE EXISTING JET FLEET.  AS YOU MAY HAVE HEARD ANNOUNCED BAHAMASAIR WILL LAUNCH A NEW SERVICE FROM EXUMA AND LONG ISLAND/MIAMI AND IS REVIEWING FREEPORT/RICHMOND/CLEVELAND AND CINCINNATI SERVICE.

THE TWO EXISTING JETS WILL REACH THE 66,000 CYCLE THRESHOLD BY NEXT SUMMER WHICH WILL NECESSITATE THEIR UNDERGOING SIGNIFICANT STRUCTURAL INSPECTION DIRECTIVE CHECKS AT A COST OF APPROXIMATELY $900,000 PER AIRCRAFT.  THE COST OF THESE CHECKS WILL EXCEED THE MARKET VALUE FOR THE AIRCRAFT AS WE CAN ONLY REASONABLY EXPECT A SCRAP VALUE OF $300,000 WHEN WE RETIRE THEM NEXT SUMMER.  WHATEVER WE REALIZE FROM THEIR DISPOSITION WILL BE APPLIED AGAINST THE DEBT USED TO ACQUIRE THE TWO ADDITIONAL 737-200’s.

THE AIRCRAFT HAVE BEEN PURCHASED FOR $2,100,000 PER UNIT – POST “C” CHECK.  TOTAL INVESTMENT FOR BOTH AIRCRAFT INCLUDING MANDATORY “C” CHECKS WILL BE APPROXIMATELY $4,200,000.  WHILE THESE AIRCRAFT ARE OF THE SAME VINTAGE AS THE EXISTING JETS IN THE FLEET THEY HAVE HAD MUCH LESS UTILIZATION AND IN FACT HAVE ALMOST A THIRD OF THE CYCLES THAT THE EXISTING JETS HAD WHEN THEY WERE PURCHASED BY THE PREVIOUS GOVERNMENT.

THESE AIRCRAFT WILL HAVE BETWEEN 17,000 AND 18,000 CYCLES WHEREAS WHEN THE EXISTING JETS WERE ACQUIRED AT A COST OF $7,000,000 EACH, THEY HAD BETWEEN 43,000 AND 46,000 CYCLES.  THESE JETS, BECAUSE THEY HAVE LARGER ENGINES WILL ENABLE BAHAMASAIR TO FLY LONGER RANGE SECTORS WHICH IS CONDUSIVE TO THE TOURISM MISSION AND CHARTER BUSINESS THEY ARE PERSUING.

ON THE MATTER OF CHARTERS MR. SPEAKER, I AM SO PROUD OF THE JOB MANAGEMENT IS DOING IN THIS AREA.  OVER THE PAST TWO YEARS SINCE MY GOVERNMENT CAME TO POWER BAHAMASAIR HAS ENTERTAINED CHARTERS TO PLACES THEY HAVE NEVER BEEN BEFORE LIKE PUERTA PLATA DR, GREENSBORO, NORTH CAROLINA; RHODE ISLAND, NEW ORLEANS, GRAND CAYMAN, FT. LAUDERDALE / EXUMA, PHILADELPHIA, NEWARK/FREEPORT/TORONTO, ALLENTOWN, PENNSYLVANIA; GRAND CAYMAN/PANAMA CITY AND BRISTOL, TENNESSEE FOR TOTAL REVENUE OF $917,837.

MR. SPEAKER, ADDITIONAL CHARTERS IN THE PIPELINE FOR THE NEXT THREE MONTHS INCLUDE PHILADELPHIA, ALLENTOWN, PENNSYLVANIA; CHICAGO, ROCHESTER, NEW YORK; MEXICO AND CHARLOTTE, NORTH CAROLINA FOR A TOTAL OF $752,830.  NOW YOU SEE MR. SPEAKER, WHY WE NEED A SOLID, RELIABLE FLEET.  BAHAMASAIR CAN BE MUCH MORE TO THE BAHAMAS IF WE JUST ALLOW THEM TO BE BUSINESS DRIVEN AND NOT POLITICALLY DRIVEN.

THE TWO ADDITIONAL AIRCRAFT WILL ALSO ENABLE BAHAMASAIR TO VIRTUALLY ELIMINATE ITS DEPENDENCE ON WET LEASING WHICH HAS BEEN STEADILY DECLINING FROM $4.1 MILLION IN 2002 TO $2.9 MILLION IN 2003 TO $1.3 MILLION IN 2004.  WE EXPECT THE COST OF WET LEASING TO BE ZERO AFTER RECEIPT OF THE SECOND JET BARRING ANY UNFORESEEN MECHANICALS.

MR. SPEAKER, THE ONLY PHYSICAL DIFFERENCE BETWEEN THE JETS JUST ACQUIRED AND THE EARLIER ONES IS THAT THE LATEST ONES DO NOT HAVE RETRACTABLE STAIRS WHICH TO INSTALL WOULD HAVE DELAYED DELIVERY AND REQUIRE CUTTING INTO THE NOSE OF THE AIRCRAFT. WE AGREED THAT THIS WAS NOT ADVISABLE AT THIS POINT IN THE AIRCRAFT LIFE CYCLE.  WE HAVE OVERCOME THIS SITUATION BY HAVING AAR SUPPLY US WITH FOUR SETS OF PORTABLE STAIRS TO BE POSITIONED AT AIRPORTS WE WILL FLY THE AIRCRAFT.

MR. SPEAKER, I HAVE BROUGHT ALONG WITH ME COPIES OF THE SALES AGREEMENT, THE LOAN AGREEMENT, COMPETENCY REPORTS BY LUFTHANSA ONE OF THE WORLD’S LEADERS IN AIRCRAFT ASSESSMENT AND THE “C” CHECK REPORTS  BOTH OF WHICH GAVE THE AIRCRAFT A CLEAN BILL OF HEALTH.  THIS IS HOW IT SHOULD BE DONE MR. SPEAKER, WITH TOTAL TRANSPARANCY AND ACCOUNTABILITY UNLIKE THE WAY THE PREVIOUS GOVERNMENT DID IT.  A SEARCH OF THE RECORDS OF BAHAMASAIR HAS FAILED TO DICSLOSE THE EXISTENCE OF ANY COMPETENCY REPORTS ON THE TWO JETS THEY BOUGHT ON THEIR WATCH.

MR. SPEAKER, BAHAMASAIR HAS BORROWED $3,400,000 TO COMPLETE THE PURCHASE AND CARRY OUT THE MANDATORY “C” CHECKS.  THE LOAN OF $3,400,000 ($4,200,000 LESS DEPOSIT OF $800,000) WILL BE AMORTIZED OVER FIVE YEARS AT THE END OF WHICH AVITAS, THE LEADING AIRCRAFT APPRAISER, ESTIMATES THE VALUE WILL BE $1,500,000 EACH.  THE LOAN IS PRICED AT 1-1/8% OVER SIX MONTH LIBOR WITH A PRESENT EFFECTIVE RATE OF LESS THAN 3%.

MR. SPEAKER, CONTRAST THIS WITH THE LOAN TERMS NEGOTIATED BY THE PREVIOUS GOVERNMENT FOR THE TWO EXISTING JETS WHICH WAS $10,500,000 OVER 6 YEARS AT 0.95% OVER SIX MONTH LIBOR WITH AN EFFECTIVE RATE OF 6%.  IT’S LIKE NIGHT AND DAY MR. SPEAKER.  THE SECURITY FOR THE LOAN IS THE TRADITIONAL GOVERNMENT GUARANTEE FOR WHICH WE HAVE COME TO SEEK APPROVAL FROM THIS HONORABLE HOUSE.  MR. SPEAKER ALL REASONABLE THINKING PERSONS WILL AGREE THAT BOTH THE PURCHASE TERMS AND THE CREDIT TERMS WERE SKILLFULLY NEGOTIATED TO THE BENEFIT OF BAHAMASAIR THEREFORE MEMBERS SHOULD HAVE NO DIFFICULTY LENDING THEIR SUPPORT TO THE GOVERNMENT OF THE COMMONWEALTH OF THE BAHAMAS PROVIDING THIS LOAN GUARANTEE IN THE AMOUNT OF $3,400,000 TO SCOTIABANK.

MR. SPEAKER, THE FIRST OF THESE TWO AIRCRAFT WENT INTO SERVICE ON JULY THIS YEAR AND THE SECOND ONE IS SCHEDULED TO ARRIVE TODAY AND WILL GO INTO SERVICE TOMORROW IN TIME FOR THANKSGIVING AND THE CHRISTMAS HOLIDAY.  MR. SPEAKER, WE HAVE ALL HANDS ON DECK THIS SEASON TO ENSURE THAT WE DO NOT EXPERIENCE THE TRADITIONAL CHAOS WITH DISPLACED PASSENGERS AND BAGS DURING PEAK SEASONS.

 I AM ADVISED THAT THIS PAST WEEKEND EVERYTHING WENT LIKE CLOCK WORK WITH THE EXCEPTION OF A FT. LAUDERDALE/FREEPORT FLIGHT WHICH EXPERIENCED A MECHANICAL.  MR. SPEAKER, WITH VIRTUALLY ALL FLORIDA FLIGHTS FULLY BOOKED THERE WERE ONLY 8 BAGS LEFT IN MIAMI ON SUNDAY NIGHT WHICH WERE DELIVERED MONDAY MORNING.  MR. SPEAKER, THE PRESENT BOARD AND MANAGEMENT OF BAHAMASAIR ARE DEADLY SERIOUS ABOUT DELIVERING A QUALITY PRODUCT TO ITS PASSENGERS.

MR. SPEAKER, BAHAMIANS THROUGHOUT THE BAHAMAS SHOULD BE PROUD OF THE JOB THE BOARD, MANAGEMENT AND THE STAFF ARE DOING AT BAHAMASAIR.  THE SAFETY RECORD OF THE NATIONAL FLAG CARRIER IS AMONG THE BEST IN THE WORLD.  OUR PILOTS AND FLIGHT ATTENDANTS ARE FIRST CLASS.  THEY HAVE MADE A DIFFERENCE.  I ONCE AGAIN ENCOURAGE BAHAMIANS AND RESIDENTS  TO SUPPORT THEIR NATIONAL FLAG CARRIER.

MR. SPEAKER, THE AUDITED FINANCIAL STATEMENTS AND THE ANNUAL REPORT I HAVE TABLED TODAY SHOULD SEND A CLEAR MESSAGE TO THE BAHAMIAN PEOPLE THAT PRIME MINISTER PERRY CHRISTIE’S GOVERNMENT IS DELIVERING ON ITS PROMISE TO THE BAHAMIAN PEOPLE  AS OUTLINED IN OUR PLAN.  I WANT TO THANK IN PARTICULAR THE RT. HON. PRIME MINISTER AND MINISTER OF FINANCE AND MY CABINET COLLEAGUES FOR THEIR SUPPORT FOR THE NATIONAL FLAG CARRIER.

FINALLY, LAST BUT BY NO MEANS THE LEAST, I WISH TO THANK SCOTIA  BANK  (BAHAMAS) LTD. FOR THEIR SUPPORT IN THE GRANTING OF THE LOAN.

MR. SPEAKER, THE MEMBER OF PARLIAMENT FOR MONTAGU RAISED SOME QUESTIONS REGARDING THE UTILIZATION OF THE FIRST OF THE ADDITIONAL JETS. THESE JETS WERE ACQUIRED TO NEGATE THE NEED FOR WET LEASE DURING LOCAL AND INTERNATIONAL TRAVEL DEMAND PEAKS AND TO PROVIDE REDUNDANCY IN FLEET TO IMPROVE BACKUP.
FURTHER, TO ASSIST WITH THE CHARTER BUSINESS LIKE DRIFTWOOD AND TO REPLACE THE AGING JETS IN THE AIRLINE FLEET.  I HAVE MENTIONED ALREADY THAT THE TWO OLDER JETS WILL BE REMOVED FROM SERVICE SOMETIME NEXT YEAR.  FOR THE INFORMATION OF MEMBERS, WET LEASING HAS CAUSED THE AIRLINE SOME $13.9 MILLION OVER THE PAST FIVE YEARS.
2000 $4.2M
2001    2.3M
2002    4.1M
2003    2.9M
2004    1.3M
                TOTAL               $13.9M

MR. SPEAKER, AS MENTIONED EARLIER, BECAUSE THE TWO ADDITIONAL JETS HAVE MORE ADVANCED ENGINES, THESE AIRCRAFTS CAN FLY LONGER RANAGES THEREBY FACILITATING UPLIFT OF TOURISTS TO THE BAHAMAS FROM MARKETS AS FAR AWAY AS TORONTO, HOUSTON AND MANY OTHER EASTERN AND MIDWESTERN MARKETS.  PRESENTLY, EQUIPMENT IS ROTATED TO MEET DEMAND.  IN OTHER WORDS, IF DEMAND ONLY REQUIRES A DASH-8, BAHAMASAIR USES A DASH-8 TO CONSERVE COST AND IMPROVE LOAD FACTOR WHICH  IS  A  SMART  WAY TO MANAGE YOUR FLEET UTILIZATION.

AT THE RECENT ROTARY ADDRESS I DELIVERED I COINED A NEW SLOGAN FOR BAHAMASAIR “BE ON TIME OR YOU WILL BE LEFT BEHIND”.

MR. SPEAKER, IT IS WITH A GREAT DEAL OF PERSONAL PRIDE AND PLEASURE THAT I SECOND THE RESOLUTION TO GUARANTEE A LOAN OF US$3,400,000 ON BEHALF OF BAHAMASAIR HOLDINGS COMPANY LTD. THE NATIONAL FLAG CARIER OF THE COMMONWEALTH OF THE BAHAMAS.