CAL’s losses grow with grounded planes
(CNS): Projected earnings for Cayman Airways Ltd have been upended as a result of the worldwide grounding of the Boeing 737 Max 8 aircraft in the wake of two fatal crashes last year. CAL CEO Fabian Whorms said that having the two planes leased by CAL parked was not “essentially costing us anything”, but the situation has led to the airline missing budget targets because it is depending on the aging 737s. With no sign of the new planes being cleared for take-off anytime soon, CAL is facing more losses in the next budget period.
Appearing before Finance Committee on Wednesday evening, Whorms explained how the grounding of the two planes and not being able to take delivery of the third plane meant that maintenance and fuel costs were much more than expected. This was because they had to rely on the existing older fleet for much longer than expected and had missed the chance to sell the planes for some profit.
But Whorms made it clear that the national flag carrier was not abandoning the decision to replace the old 737’s with the Max 8’s. He said that neither the ministry nor the board had directed them to disengage from the lease and so they would continue to wait.
Though guarded about the current situation with the grounded aircraft, he spoke of a unique arrangement that CAL had with the leasing company and said that it was “essentially costing us nothing”. However, he said he could not talk about the details because it was commercially sensitive.
Captain Dave Scott, a former CAL pilot and now VP of flight operations, was brought to the Legislative Assembly to offer his opinion on the now extremely controversial plane. Scott, who has flown a simulator testing the aircraft’s revised software, said he believes this final repair will make the aircraft extremely safe, once it is given the all clear for take-off.
“I have no doubt that when the aircraft is re-certified, it will probably be one of the safest aircraft in the sky,” Scott claimed, adding that he thought it was a beautiful aircraft.
While convincing staff to get back on board is one thing, the MLAs were concerned about how CAL was going to convince the public that the planes are safe once they are back in service. They also questioned what would happen if some US cities, such as Miami, imposed bans on the Max 8’s flying in their air space, as has been suggested.
However, the airline officials were reluctant to speculate about what might or might not happen once the planes are cleared to fly again.
Whorms said that it could be nine months before the planes are certificated. CAL was therefore keeping the planes in “active storage” and maintaining them regularly, but that decision might be reviewed, he said, noting the possibility of flying the planes to the US for more long-term storage.
However, Whorms said he was still hopeful that the planes may be cleared by early next year, as he confirmed that CAL must retire one of the 737’s in February. At that point the airline will face a serious problem if the Max 8’s are still parked.
CAL has fallen short on its budget forecast by CI$6.35 million, but Whorms told the committee that this was not a year when anyone could have predicted what happened. The airline is also still carrying approximately $19 million in debt, and so, in addition to its subsidies to fly domestic services and the specific gateways for the tourism ministry, government is injecting $5 million to cover operating losses as well as $4 million for the loan payments.
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Category: Government Finance, Politics
NYT story on the Lion Air 737MAX crash – https://www.nytimes.com/2019/11/24/world/asia/lion-air-boeing-indonesia.html
asked before….what % of cal passengers are flying free???
Higher % than any other airline in this hemisphere.
Are the past Directors and Employees of CAL still flying for free?
Of course they are…they are also reserving precious weekend flight spaces (in case someone in their family needs them) and cancelling at last minute without any penalty. So much so that “full” flights can have whole rows empty when you get on the flight. Abuse we have abided for years!
boycott cal….rip-off prices….poor time keeping….rubbish planes…rubbish rewards programme…
Get rid of the MAX!!! Maybe we should vote on this and see how many will, or will not fly on it!
Referendi!
I will NOT be flying the MAX! Neither will I be allowing my family to. That’s a firm NO.
I believe in CAL’s financial year 2016-17 Government injected in excess of $16million dollars into CAL’s coffers and I am confident it will be somewhat more in the current financial year.When is this going to stop (growing)?.
We learned a few years ago, when it was covered in the media, that CAL doesn’t routinely pay it’s landing fees to CIAA like other airlines do. CAL collects those passenger fees and spends it themselves, without a care in the world. These millions are routinely written-off every couple years as a CIG payable to CIAA and not included in the direct CAL subsidy calculation. So much so, that some $10mln of the $55 initially projected “on-hand” cash for Owen Roberts reno was in the form of (yet another) unpaid receivable from CAL.
Strange concept – mechanical contrivances that were made by humans that cannot be fixed by humans!!!
We fly every day in planes that have issues.
We drive every day in cars that have issues.
Look at all the recalls for cars, many for very serious reasons.
Compare how many people die each day to that of the total numbers of people each year that die in commercial aircraft.
I think the issue is actually one of people not feeling safe because they are not in control, but I am certain that the drive to the nearest gas station is much more dangerous than flying around the world in a Max 8
And no I am not involved in the airline industry at all
This airline could and should be managed better than it is doing…of course, if you keep bailing your kids out of debt, they will continue to run rampant.
Fire the Cal board, CEO and Chairman Phillip Rankine. This was a sweet deal struck without proper checks and balances. When will it be time for ACC to follow the $$$$ and start asking real questions about the deal from Minister Kirkconnell and Chairman Rankine?
The ignorance of the comments is stunning. Read the crash investigations. Pilot lack to training and failure to turn off the auto pilot when the situation arose. Air bus loved the bad Boing publicity. I have flown the Max 8 many times and it is a great aircraft.
Ha!!! Not getting on a max 8 ever.
9.04am “IGNORANCE”!. If the crashes were due to pilot error why has every single 737 Max 8 been grounded for more than a year, why has Boeing offered compensation to the victims, why have most countries banned these aircraft from flying over their airspace etc etc. Your comments are far more stunning than those to which yoo refer, I also suggest you concentrate on learning how to write grammatical English.
9:04am – I saw one typo. What is your problem with the grammar? Don’t be a blowhard. It is possible to state your opinion without attacking the other person.
Ermm. What training? The system wasn’t even mentioned in the Boeing manual before the first fatal. And the Ethiopian pilots tried to follow the guidance issued after the Lion Air crash, but it didn’t work. Your position seems to be that its the pilots fault for failing to correct a problem entirely introduced by a faulty aircraft.
Watch the many documentaries on youtube.
Profit was placed before safety.
Nobody should board these planes ever.
Get rid of them …
Is it true that Cayman Airways is continuously hiring persons that used to manage Air Jamaica?
Yes. Many of the Air Jamaica lackeys unfortunately manage the maintenance department.
They are all married to Caymanians by now. So there’s no going to be any Caymanians training for management positions.
Vote No
Sure, nobody could have predicted the two crashes, countless near losses, and the emerging coverup jobs. But with first deliveries of any substantially updated model of anything, you’re volunteering to accept much higher recall and operational risk than with equipment that has been properly debugged over a season or two. Our airline exec didn’t factor any provision for new engines, avionics and other known mods, or insure against the potential for operational downtime. Even the 737 NG are being recalled now for fan blade modifications – affects 7000 commercial aircraft! CAL Mgmt suite are absolutely inflexible in their seat-of-the-pants thinking, take enormous consequence-free gambles with our money, and that’s why it costs us $20mln a year ($10mln in direct subsidy, and the other $10mln in recurring unpaid landing fees). It’s not because they are good at their jobs. We’d be better off just paying every Caymanian $1000 a year in flight bursaries to fly another airline.
You know its very easy to bash CAL, but when time get rough… little old CAL is there to take people out of harms way, when all the other BIG airlines disappear at the slightest word that “a storm a come”. I fly CAL when I can, and I will continue to support CAL. I hope and Pray that they overcome. I am very proud of CAL, and I don’t care who likes it or not. Keep up the good works CAL.
That is such a lame and false argument. To spend $20+ million every year for that makes no sense. You could charter any number of 737s you need at a moments notice in the event of a natural catastrophe. Get real.
Fly JetBlue, fares are cheaper
You can charter a lot of aircraft for hurricane evacuation for the the tens of millions of dollars each and every year spent on CAL.
Still flogging that dead horse , but no vision of the financials that other’s here are able to see , with crystal clear vision ?
The argument to keep CAL flying , based on flying in & out during the one storm in 15 years makes perfect fiscal sense.
one storm???
3.41pm They are a bit like our Civil Service, cost us a fortune which increases each year, employs nearly all Caymanians, and can do no wrong.
God Bless our National Flag Carrier!
God Bless the Cheaper Fares and Safer Airlines
God Bless your pocketbook as you are paying for it every day.
yup…i believe every word he say….no doubt….hey fabian…go tell that to those that lost their lives on this type of aircraft needlesly!!! i scared of it…..and scared of boeing….
Those stupid fools still went and bought the air max’s after planes were crashing. Thats what they get.
Those “stupid fools” as you call them, were the first country/territory in the world to ground them when it was clear they were a danger. NOBODY else was doing that at that time and everyone else was still flying them.
Point made but does that justify us being first to put them back in service again? Would you like be the first to fly them again brave man?
Yes, we are a brilliant people with the best managed airline in the world. Right Big Beau?
??
I was within 12 hours 90% of the world had grounded the planes.
5.35pm The immediate “heroic gesture” to ground them was based on not having to worry about any economic loss, CAL unlike most airlines is not in business to make a profit, it has a bottomless pit of taxpayer dollars to bail it out, ad infinitum.
Only two crashed and Cayman AIrways was the second airline to ground their airplanes.These airplanes were purchased years before not after the two crashed.
These are machines and they had a flaw that caused to of them to crash but remember there was a lot of them flying that didn’t and a lot of them are still being ferried around the USA now without falling out of the sky.
This was a very serious problem but it is being corrected. Last year Honda had a recall because of air bags inflating and pieces of metal from it hitting the driver. Honda replaced everyone of the air bags..They didn’t throw away the cars..
They will be fixed and for what it’s worth they will likely be the most safe planes to fly on simply because they cannot afford to have anything happen again..
Airbus or Embraer….?
When the FAA finally approves, how much longer is it going to take the UK CAA/Europeans to also approve? Has that been factored in?
If you read up a bit you’ll see Airbus is also having problems. BA just chose the B737 as the replacement for their A320-series fleets.
What I don’t understand is why CAL made the jump from their older 737s to the 737 MAX when it would have been far cheaper to buy or lease 737-800s.
It’s the ‘shiny new toys’ syndrome.
Firstly, IAG who own BA have only signed a letter of intent for 200 planes. They have not committed to purchasing anything.
Um…BA replaced the B737 with the A320. BA does not own any B737s at all today. Only A320s. Stop living under a rock
8:00 Maybe not but BA has signed letters of intent for 200 737 MAXs to replace their A320-series and one of the reasons for that is the damn things are getting so unreliable as they get older. Someone I trained back in 1982 just retired from BA and they say the aircraft are getting to be a joke.
BA still operates the Boeing 737-400, 737-800 and the Max 8, through its Comair Franchise in south africa.
737 NG fan blade recall and they are still flying too.
Wrong. The deal on the max8s was better than the deal on the 800s. Also lower operating costs with max8s.
9.51am I thought it was based on the longer range so CAL could undertake long haul flights to Timbuktu to bring in all those African tourists.
Lower operating costs now alright as they sit on the ground gently rotting in the heat and humidity of Cayman.
Categorically false. Short term maintenance is slightly more cost effective with the MAX series, however, the margins are negligible in long term maintenance. It makes no sense, even given a “sweet deal”, that new 800 or ideally 700 NG’s were more expensive than the Max. These fuel efficiencies compared to our previous NG ship were based on the fact that we opted for one of the least efficient NG options. We had no upgraded winglets, comparatively smaller payload certifications, and weaker engine ratings on the NG. The CAL board (and Moses) consists of individuals with next to no experience in the airline industry, and unfortunately, the CEO must take their greed into account with all of his decisions. I believe Fabian would lead the company correctly if he wasn’t continuously influenced by these clowns on the board and the Ministers agenda.
Embraer is owned by Boeing and Airbus is having their own set of issues with their A320..
Let’s get the problems fixed with the MAX and re-certified by the FAA/CAA
Ummm. The problems with the Max are unfixable. 21st century engines do not fit on 1950’s designed airframes.
9:27 What about the re-engined KC-135 tanker and the C-130J? Possibly two of the most successful aircraft ever built. I’ve flown in a 1930s Ju52 fitted with P&W Wasp engines and an A320 cockpit, and a C-47 re-engined with P&W PT6A turboprops. It’s not an engine issue, this is a software and training issue. Modern pilots are getting to be little more than button pushers. They don’t have the training to react to what the aircraft is telling them rather than what the electronics are saying. The fact is the 737MAX simply wasn’t idiot-proofed and it was crashed by inexperienced crews who didn’t know any better.
Size matters. The width of the LEAP B engines do not allow their placement under a 737 wing where they should be. The compromise was to move them up and forward, which messes with aerodynamic forces. The MCAS system was put in to compensate.
Any way you put it, it seems LEAP B’s do not fit in the optimal place on a 737 without lengthening the undercarriage. Since lengthening the undercarriage is not a prospect, the Max, it appears, must fly with engines in an “other than ideal” location.
I prefer to fly on planes that were designed with engines in the ideal place, and that do not need computers to override an apartment flaw.
Airbus flight computers have been killing people for 30+ years
10.03pm You need to go back on your medication – RIGHT AWAY!.
10:03 It’s not the computers – it’s the third world airlines the aircraft were sold to.
CNS everyone should know that when you say “the government is injecting” money that it is us the people who are actually footing the bill. I sincerely hope that only money is lost when these iron dodos fly again since there will be hell to pay if lives are lost.
CAL is foolhardy to risk lives and our country’s already shaky reputation by pushing these planes back in service.
People slam KX but we CANNOT lose our national carrier.
If we lose them, AA will move in and our flight cost to MIA will double. I’ve said it before. If you will remember, that is exactly what happened when KX stopped servicing Orlando nonstop and when the Turks and Caicos national carrier folded. AA swooped in and the cost (at the time) went from just under $200 to touching $400.
So invest in planes that fly and that the public has confidence in.
Farm it out like it was decades ago. At least it made money when TACA was running it.
TACA??? Which country are you living in?…TACA has never flown here as far as I know..
LACSA
Cayman Airways leased airplanes from Lacsa..Lacsa did not run Cayman Airways…
So why did 1977 era BAC 1-11’s have “operated by Lacsa” painted on them?
The aircraft were leased and operated by Lacsa. Lacsa owned shares in Cayman AIrways and during Jim Boddens time, the government bought those shares but the airline was never owned by Lacsa…
Lacsa no longer exists…Cayman Airways does..
Have you ever heard of a company keeping its name but being run by another company. What rock have you been under?
Just curious when did the Turks and Caicos operate a national carrier similar in scope to CAL ?
Turks has never had their own airline.. Flights were operated there only by Pan Am and when they went out of business, no one would fly there, so Cayman Airways was asked to help and did..After Cayman AIrways got the service back up and running, the government of Turks And Caicos decided to pay American to operate an additional flight but refused to give Cayman Airways anything for the two they were operating out of Miami..Long story short American came in, Cayman Airways left and the ticket prices to Turks and Caicos skyrocketed.. For years they had to pay American for airlift until other airlines decided to fly there.
Fly JetBlue or Southwest, fares are cheaper. There are way more options that CAL.
2.51pm Try flying to Fort Lauderdale.
Planes only make money when they are in the air …
And should these planes (CAL’s planes) fall out of the sky whose going to pay the piper then?
Do you really think the FAA and the CAA would certify these planes to fly again if they didn’t think they were safe?..Stop with the scaremongering..
So why did the FAA let Boeing certify their work? Remind me again about that would you please.
Fan blades on 7000 737 NG’s have to be recalled and retrofitted, once there is actually a replacement solution engineered by Boeing and approved by FAA…those planes are still flying only because it was only one person sucked out of the fuselage…groundings are hinged not to proportionate safety risk, but to acceptable body count and stock price/US manufacturer headline risk.
Like the FAA did the first time you mean? Or like when they failed to ground them after all the pilot reports or the first fatal? Hardly scaremongering to think that maybe the FAA has let commercial considerations interfere in its safety assessment.