DECEMBER 3rd 2003
 
MR. SPEAKER,

I RISE TODAY TO SECOND THE MOTION ON THE RESOLUTION, WHICH SEEKS APPROVAL FROM THE GOVERNMENT OF THE BAHAMAS TO GUARANTEE, ON BEHALF OF BAHAMASAIR, A LOAN FROM SCOTIA BANK IN THE AMOUNT OF $7,250,000.  THE LOAN IS TO BE REPAID OVER SEVEN YEARS AT A FLUCTUATING RATE OF 1 1/8% OVER THREE MONTH LIBOR – PRESENT EFFECTIVE RATE OF 2.8%.  THE FUNDS, AS MENTIONED BY THE MOVER OF THIS RESOLUTION, ARE NEEDED MR. SPEAKER TO ACQUIRE TWO 1992 50 SEATER DASH-8 311 SERIES AIRCRAFT FROM BOMBARDIER THE MANUFACTURER OF THESE AIRCRAFT.

MR. SPEAKER, BAHAMASAIR CONTINUES TO BE THE SUBJECT OF LIVELY DISCUSSION AMONG POLITICIANS AND THE GENERAL PUBLIC AS TO ITS UNRELIABILITY.  WE, WITH THE HELP OF GOD, THE BAHAMIAN PEOPLE, AND STAFF OF THE NATIONAL FLAG CARRIER, ARE PURSUING AVENUES TO CHANGE THAT.

MANAGEMENT AND THE BOARD HAVE BEEN SEEKING TO EXPAND BAHAMASAIR’S FLEET OF AIRCRAFT FOR SOME TIME AND AFTER THOROUGH RESEARCH MR. SPEAKER, THESE TWO AIRCRAFT WERE SELECTED.

INDEED, MR. SPEAKER, I AM ADVISED THAT ONE OF BAHAMASAIR’S PILOTS, ON SEVERAL OCCASIONS IN RECENT MONTHS, OPINED THAT BAHAMASAIR WAS PROMISED ADDITIONAL AIRCRAFT ON SO MANY OCCASIONS IN THE PAST HE COULD NOT BELIEVE THAT THIS WOULD REALLY HAPPEN.  CONSEQUENTLY, ON THE ARRIVAL OF THE AIRCRAFT HE CAME OVER TO THE CEREMONY AND SAID, ‘I HAD TO SEE IT TO BELIEVE IT.’

MR. SPEAKER, I AM HOPEFUL THAT THE ADDITION OF THESE TWO NEW DASH-8S WILL BRING HIM AND THE REST OF BAHAMASAIR’S STAFF TO THE REALIZATION THAT THE GOVERNMENT IS SERIOUS ABOUT ITS COMMITMENT TO THE BAHAMIAN PEOPLE AS OUTLINED IN THE PLP’S ‘OUR PLAN’.  AND THESE ARE:
· TO DEVELOP A COMPRENENSIVE BUSINESS PLAN THAT WOULD REDIRECT THE NATIONAL FLAG CARRIER TOWARDS MEETING THE GOALS AND OBJECTIVES AS OUTLINED IN ITS MISSION STATEMENT;
· TO PROVIDE THE AIRLINE WITH THE SUPPORT NECESSARY FOR STABILITY, FUTURE GROWTH AND TO ENFORCE FINANCIAL FITNESS STANDARDS THAT WILL MAKE THE AIRLINE ATTRACTIVE TO PRIVATE INVESTORS;
· TO RETAIN PART OWNERSHIP OF THE AIRLINE BECAUSE OF ITS POTENTIAL, AND THE CRUCIAL ROLE IT WOULD PLAY IN THE COUNTRY’S TOURIST INDUSTRY;
· TO ENTER INTO AN ARRANGEMENT WITH LOCAL COMMUTER CARRIERS TO OPERATE CERTAIN LOW DENSITY ROUTES THAT ARE NON PROFITABLE TO BAHAMASAIR.  THESE COMMUTERS MAY USE SMALLER, TURBINE ENGINE AIRCRAFT WITH 15 OR MORE SEATING CAPACITY, THEREBY REDUCING CAPITAL AND OPERATING COSTS.  THIS ARRANGEMENT WILL NO DOUBT PROVIDE BETTER FREQUENCY AND LOWER COSTS TO THE TRAVELLING PUBLIC.  THESE CARRIERS WILL BE SUBJECTED TO THE SAME AIR WORTHINESS STANDARDS AND OVERSIGHT, REQUIRED BY THE AUTHORITIES AS BAHAMASAIR PRESENTLY IS;
· TO MAKE BAHAMASAIR A NATIONAL FLAG CARRIER THAT THE STAFF, PUBLIC AND SHAREHOLDERS WILL BE PROUD OF; AND
· TO PIONEER NEW INTERNATIONAL ROUTES.
 
MR. SPEAKER,
ONCE THESE TWO AIRCRAFTS WERE SELECTED BASED ON ECONOMIC VIABILITY AND SUITABILITY FOR OUR ENVIRONMENT, BAHAMASAIR CONTRACTED LUFTHANSA, IN ADDITION TO ITS OWN TECHNICAL STAFF, TO CONDUCT TECHNICAL COMPETENCY ANALYSIS TO ENSURE MR. SPEAKER, THAT WE WERE GETTING VALUE FOR OUR MONEY.  BOTH TECHNICAL COMPETENCY REPORTS, MR. SPEAKER, WERE POSITIVE AND SPOKE VERY HIGHLY OF THE CONDITION OF THESE AIRCRAFT.

MR. SPEAKER I AM ADVISED THAT BAHAMASAIR ALSO PERFORMED A THOROUGH COST/BENEFIT ANALYSIS OF THE LEASE VERSUS PURCHASE OPTIONS AND DETERMINED THAT OVER A SEVEN-YEAR PERIOD THERE WAS A $2,186,349 CASH FLOW ADVANTAGE BY PURCHASING.  MR. SPEAKER THIS IS BEFORE YOU CONSIDER THE RESIDUAL MARKET VALUE OF THE AIRCRAFT AFTER SATISFYING THE DEBT AND FULLY DEPRECIATING THE ASSET.  THE INDUSTRY ESTIMATES THIS RESIDUAL VALUE WILL BE $2,970,000 IN SEVEN YEARS.

THE AIRCRAFT “BLUE BOOK” VALUE OF $3,720,000 PER AIRCRAFT WAS NEGOTIATED DOWN TO THE $3,625,000 PER AIRCRAFT.  IN SHORT MR. SPEAKER, I UNDERSTAND AND HAVE BEEN ADVISED THAT WE GOT AN EXCELLENT DEAL ON THE AIRCRAFT.

MR. SPEAKER, ON BEHALF OF THE GOVERNMENT OF THE BAHAMAS I WISH TO EXPRESS SINCERE GRATITUDE TO THE BOARD OF BAHAMASAIR FOR ITS SKILLFUL NEGOTIATION OF THIS CONTRACT.  MR. SPEAKER, AFTER THEY HAD CONCLUDED THEIR NEGOTIATIONS WITH THE SELLER, I WAS ABLE, AS MINISTER, TO NEGOTIATE A FURTHER REDUCTION WITH THE SELLER AGREEING TO PROVIDE AN ADDITIONAL $50,000.00 IN SPARE PARTS AT NO ADDITIONAL COST TO THE NATIONAL FLAG CARRIER.
 
AESTHETICALLY AND FUNCTIONALLY THESE AIRCRAFT COME EQUIPPED WITH LEATHER INTERIOR, FUEL EFFICIENT TURBINE ENGINES, LOW NOISE EMISSION, COCKPIT FLIGHT MANAGEMENT SYSTEM AND HF RADIO.

THERE ARE 400 OF THIS TYPE AIRCRAFT IN SERVICE ALL AROUND THE WORLD THAT SHOULD MAKE SPARE PARTS AND SERVICABILITY A NON-ISSUE.

MR. SPEAKER THESE ADDITIONAL AIRCRAFT ARE NECESSARY TO IMPROVE THE RELIABILITY OF BAHAMASAIR’S SERVICE.  IT IS AN ACCEPTED CONVENTION IN THE INDUSTRY THAT FOR EVERY SEVEN AIRCRAFT IN A FLEET THERE SHOULD BE A SPARE FOR BUILT IN REDUNDANCY TO RECOVER FROM MECHANCIAL FAILURES. BAHAMASAIR HAS HAD SEVEN OR MORE AIRCRAFT FOR OVER TEN YEARS AND NEVER ENJOYED ANY DEGREE OF EQUIPMENT REDUNDANCY.  INSTEAD MR. SPEAKER ALL OF THEIR AIRCRAFT HAVE ALWAYS BEEN SCHEDULED TO THE MAX IN AN EFFORT TO MEET THEIR MANDATE.

MR. SPEAKER IT IS EXPECTED THAT BY BAHAMASAIR IMPROVING ITS RELIABILITY, IT WILL ATTRACT THE CUSTOMERS IT LOST THROUGH BEING UNRELIABLE.

AS PREVIOUSLY ANNOUNCED, MR. SPEAKER, BAHAMASAIR, IS SET TO OPERATE A SHUTTLE SERVICE BETWEEN NASSAU AND FREEPORT, APPROXIMATELY EVERY TWO HOURS.  ADDITIONAL ROTATIONS, PRIMARILY WITH JET EQUIPMENT, WILL ALSO BE ADDED TO MIAMI, FT. LAUDERDALE AND ORLANDO ROUTES.

WITH ADDITIONAL JET FREQUENCY ON OUR SOUTH FLORIDA ROUTES MR. SPEAKER WE BECOME MORE ATTRACTIVE TO MAJOR U.S. CARRIERS WHO CAN CODE SHARE WITH US OVER OUR FLORIDA ROUTES.  THIS IS A MAJOR STEP IN EXPANDING OUR REACH AND PENETRATION INTO THE TOURIST MARKET.  I AM ADVISED THAT MANAGEMENT IS WELL ADVANCED IN NEGOTIATING ONE SUCH CODE SHARE ARRANGMEENT.

PLANS ARE BEING MADE TO ADD A NASSAU/HAITI ROUTE TO THE SCHEDULE AS WELL AS AN EXUMA/FT. LAUDERDALE ROUTE.  THESE MR. SPEAKER ALONG WITH OTHER NEW DESTINATIONS BEING ANALYSED WILL SUBSTITUTE FOR THE RELINQUISHED FAMILY ISLAND ROUTES WHICH WE HAVE BEGAN TO OUTSOURCE TO THE CHARTER/SUB SERVICE OPERATORS.

YOU WOULD RE-CALL MR. SPEAKER IN “OUR PLAN” WE COMMITTED TO ASSISTING THE CHARTER INDUSTRY TO GROW AS BAHAMASAIR EXITED UNPROFITABLE ROUTES TO FOCUS ON MORE INTERNATIONAL ROUTES.  WE ARE FULFILLING BOTH COMMITMENTS BY ASSISTING THE CHARTER OPERATORS AND EXPANDING OUR PARTICIPATION IN THE TOURISM MARKET SIMULTANEOUSLY.

MR. SPEAKER THE ADDITION OF THESE TWO AIRCRAFT WILL CONTRIBUTE TO BAHAMASAIR ABOUT $4,000,000 IN INCREMENTAL REVENUE ON AN ANNUAL BASIS.

MR. SPEAKER THIS IS JUST ONE OF THE MANY INITIATIVES THE NEW BOARD OF BAHAMASAIR HAS PUT FORWARD TO IMPROVE THE OVERALL PERFORMANCE OF BAHAMASAIR.  THE BOARD HAS OUTLINED ABOUT $4,500,000 IN ANNUAL STAFF RELATED COST SAVINGS AND A SIMILAR AMOUNT IN ANNUAL NON-STAFF RELATED COST SAVINGS.

COINCIDENTALLY MR. SPEAKER I JUST LEARNT THAT US AIRWAYS WHO HAVE JUST COME OUT OF BANKRUPTCY IS PROJECTING COST SAVINGS OF ABOUT $1 BILLION IN STAFF RELATED COSTS AND A SIMILAR NUMBER IN NON STAFF RELATED COSTS.  INCIDENTALLY MR. SPEAKER, MANY OTHER AIRLINES, INCLUDING AIR CANADA, AIR JAMAICA, AND BWIA, HAVE DONE SIMILARLY IN THE PAST ONE & ONE-HALF YEARS.

MR. SPEAKER, UNFORTUNATELY THE AIRPORT, AIRLINE AND ALLIED WORKERS UNION (AAAWU) AND THE BAHAMAS AIRLINE PILOTS ASSOCIATION (B-ALPA) HAVE FAILED TO COOPERATE IN GRANTING ANY OF THE CONCESSIONS REQUESTED.  BOTH MANAGEMENT AND THE BOARD HAVE MADE IT CLEAR TO THEM THAT THE COST REDUCTION MATTERS WILL BE ADDRESSED DURING THE CONTRACT RE-NEGOTIATIONS NEXT YEAR.

INDEED MR. SPEAKER, YOU WILL ALSO BE AWARE OF THE RECENT UNJUSTIFIED INDUSTRIAL ACTION PERPERTRATED BY THE AAAWU FOR WHAT THEY DESCRIBED AS FOUR BURNING ISSUES.  AS HAS BEEN PUBLISHED IN THE LOCAL PRESS, THE UNDUE HARDSHIP WHICH THE AAAWU IMPOSED ON THE TRAVELLING PUBLIC WAS UNNECESSARY AND INCONSIDERATE.  THE FACT MR. SPEAKER IS THAT ONE OF THE SO CALLED FOUR ISSUES WAS RESOLVED THE FRIDAY BEFORE THE SUNDAY THAT THEY STAGED THE ‘SO-CALLED’ SICKOUT.

THE SECOND ISSUE WAS RESOLVED AND A CALL MADE BY THE MANAGING DIRECTOR TO THE PRESIDENT OF THE AAAWU THE SATURDAY BEFORE THE SUNDAY THAT THEY STAGED THE ‘SO-CALLED’ SICKOUT.

THE THIRD ISSUE MR. SPEAKER WAS TO DO WITH SALARY INCREASES, WHICH BECAME DUE JULY 01, 2003 AND WHICH MANAGEMENT AND THE BOARD HAD ADVISED THE UNION TO DEFER AS PART OF THE COST REDUCTION.  IT IS NOTEWORTHY THAT BAHAMASAIR’S FLORIDA STAFF, WHO ARE COVERED BY AN AMERICAN UNION HAD INDICATED THEIR WILLINGNESS TO WAIVE THE SALARY INCERASE AT THIS TIME.  MANAGEMENT ONLY RECENTLY ADVISED THE AAAWU THAT THEIR DEMAND FOR SALARY INCREASES WAS REFERRED TO ME FOR CONSIDERATION, AS MINISTER RESPONSIBLE FOR THE AIRLINE.  THIS MEANS, MR. SPEAKER, THAT THE GOVERNMENT WILL BE REQUIRED TO FIND THE FUNDS TO PAY THE SALARY INCREASES.

MR. SPEAKER THERE WAS ALSO A COMMITMENT ON BEHALF OF THE GOVERNMENT TO PAY SALARY INCREASES TO PUBLIC SERVANTS ON 1ST JULY 2003.  HOVEVER THE UNION AND GOVERNMENT, THROUGH NEGOTIATIONS, WERE ABLE TO REACH AN AGREEMENT ON THIS ISSUE.  THERE WAS NO ‘SO-CALLED’ SICKOUT.  THEREFORE, MR. SPEAKER, ONE HAS TO WONDER WHETHER UNION LEADERS ARE ALL LIVING IN THE SAME WORLD.  IT SHOULD BE NOTED THAT THE AAAWU FILED AN INDUSTRIAL DISPUTE DATED 28TH OCTOBER 2003 IN THIS REGARD AND THE MATTER IS STILL AT THE CONCILIATION STAGE.

THE FOURTH ISSUE MR. SPEAKER, WAS CONCERNING CHRISTMAS BONUS WHICH ARE NOT DUE AND DOES NOT BECOME DUE UNTIL DECEMBER 12, 2003.

MR. SPEAKER, IN HEAVENS NAME CAN YOU TELL ME, WHY IT IS STILL NOT BETTER TO CALL THE AAAWU LEADERSHIP AND HAVE THEM EXPLAIN TO THE BAHAMIAN PUBLIC WHY IT WAS NECESSARY FOR THEM TO ATTEMPT TO CAUSE THE HARDSHIP THEY ATTEMPTED TO ON THE TRAVELLING PUBLIC.  THEY WENT SO FAR AS TO INTERFERE WITH WET LEASE ARRANGEMENTS BAHAMASAIR HAD MADE TO MOVE ITS PASSENGERS IN ORDER TO MITIGATE THE IMPACT OF THEIR ‘SO-CALLED’ SICKOUT.

THIS IS WRONG, MR. SPEAKER.  IT IS DISHONEST, IT IS DISINGENCIOUS AND IT IS DOWNRIGHT ILLEGAL AND IMMORAL.  THE BAHAMIAN PUBLIC, IN PARTICULAR, DESERVE BETTER SINCE IT IS THEY WHO MUST FORK OVER THE $20 MILLION A YEAR TO KEEP BAHAMASAIR FLYING AND THE AAAWU EMPLOYED.

THEIR ACTION, MR SPEAKER, COST THE AIRLINE ALMOST A MILLION DOLLARS IN INCREMENTAL COST AND LOSS REVENUE NOT TO MENTION THE ILL WILL AND PASSENGER INCONVENIENCE.

BUT MR. SPEAKER, IN THEIR ILL ADVISED CONDUCT THEY PROVED TO ALL STAKEHOLDERS THAT THE AIRLIFT REQUIREMENTS OF THE BAHAMAS CAN BE MET WITHOUT BAHAMASAIR.  THIS IS NOT OUR WISH, MR. SPEAKER BUT IT IS AN INESCAPABLE REALITY.

THERE WERE 175 NASSAU AAAWU MEMBERS THAT PARTICIPATED IN THE ‘SO-CALLED’ SICKOUT.  TO MANAGEMENT AND STAFF WHO LABORED THROUGH THE EXPERIENCE WHILE THEIR STRIKING COLLEAGUES PARTIED ON SAUNDERS BEACH, WELL INTO THE NIGHT, I SAY THANK YOU.

AND TO THE VALUED PASSENGERS INCONVENIENCED I ONCE AGAIN HUMBLY APOLOGIZE TO YOU.

MR. SPEAKER, THIS NEW PLP GOVERNMENT, UNDER THE ABLE LEADERSHIP OF PRIME MINISTER PERRY CHRISTIE, COMMITTED TO PROVIDING THE BAHAMIAN PEOPLE WITH TIMELY FINANCIAL INFORMATION WITH RESPECT TO VARIOUS SECTORS OF THE GOVERNMENT.

I AM PLEASED, THEREFORE, TO INFORM THIS PARLIAMENT THAT THE EXTERNAL AUDITORS FOR BAHAMASAIR HOLDINGS LDT. HAVE RECENTLY COMPLETED THEIR FIELD REVIEW OF THE COMPANY’S FINACIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2003.  THE BOARD AND COMPANY’S MANAGEMENT TEAM ARE PRESENTLY REVIEWING THE DRAFT STATEMENTS.  HOWEVER, ON CURSORY REVIEW IT WAS NOTED THAT THE TOTAL REVENUE FOR THE YEAR ENDED 30TH JUNE 2003 WAS $63,803,000.00.  THIS REFLECTED A DETERIORATION OF $3,046,000.00 OR A 4.6% REDUCTION COMPARED TO THE YEAR 2002.  TOTAL PASSENGERS TO 30TH JUNE 2003 WERE 895,000 WHICH REPRESENTED A DECLINE OF SOME 93,000 BODIES OR APPROXIMATELY 10%.  TOTAL EXPENSES FOR THE YEAR ENDED 30TH JUNE 2003 WAS $86,680,000.00 COMPARED WITH $89,216,000.00 FOR THE PREVIOUS YEAR.  THE ESTIMATED FINACIAL LOSS FOR THE YEAR ENDED 30TH JUNE 2003 WAS $ 25.5 MILLION, COMPARED TO THE PREVIOUS YEAR OF $26.5 MILLION.

MR.SPEAKER, THIS IS NOT VERY ENCOURAGING NEWS.  HOWEVER, I AM ADVISED THAT ALL SIGNIFICANT INDICATIONS CURRENTLY POINT TO A MEANINGFUL REDUCTION IN THE LEVEL OF LOSSES FOR THE FISCAL YEAR ENDING 30TH JUNE 2004 AS A RESULT OF THE ACQUISITION OF THESE TWO NEW AIRCRAFT AND OTHER COST REDUCING INITIATIVES, INCLUDING THE OUTSOURCING OF NON-PRODUCTIVE ROUTES, IN HOUSE MAINTENANCE AND C- CHECKS AND THE DISCONTINUANCE OF WET LEASING.

MR. SPEAKER, AT THE CLOSE OF THE 2002 FINANCIAL YEAR, EFFORTS WERE MADE BY THE BOARD TO OFF LOAD BAHAMASAIR’S TWO AGED JETS, WHICH AT THE TIME CARRIED A BOOK VALUE OF $6.4 MILLION COMPARED TO THE TRUE VALUE OF $5.2 MILLION.  HOWEVER, THE AIRLINE ONLY RECEIVED BEST OFFER OF $600.000.00 ON EACH AIRCRAFT OR A TOTAL OF $1.2 MILLION FOR BOTH OR SOME $4.0 MILLION LESS THAN BOOK VALUE.  IN LIGHT OF THE LOW OFFERS, THE DECISION WAS THEN TAKEN TO KEEP THE AIRCRAFT IN SERVICE ALTHOUGH THE OPERATING COST WAS SUBSTANTIALLY HIGHER THAN THE NEWER AND MORE FUEL EFFICIENT 737-300 SERIES.  HAD THE AIRLINE WRITTEN OFF THE 737-200 AT THE END OF THE 2002 FISCAL YEAR, THE LOSS AT THE END OF LAST YEAR WOULD HAVE AMOUNTED TO SOME $31.7 MILLION AND CONVERESELY A LITTLE OVER $20.0 MILLION TO THE YEAR ENDED 30TH JUNE 2003.
 
MR. SPEAKER AS WE MOVE DOWN THE CHECKLIST OF OUR INITIATIVES, IT BRINGS US CLOSER TO PRIVATIZATION. ONCE WE RAISE THE SERVICE QUALITY AND RELIABILITY LEVEL AT BAHAMASAIR WE WILL BE IN A MUCH BETTER POSITION TO NEGOTIATE AN EQUITABLE PRICE FOR THE AIRLINE.  WITH SOUND PLANNING IT IS EXPECTED THAT WE WILL GET THERE WITHIN TWELVE TO EIGHTEEN MONTHS, MR. SPEAKER.

IN THE MEANTIME, MR. SPEAKER, I ENCOURAGE ALL BAHAMIANS TO CONTINUE TO SUPPORT OUR NATIONAL FLAG CARRIER.  I ENCOURAGE THE HOTEL OPERATORS AND THE TRAVEL AGENTS TO SUPPORT THE NATIONAL FLAG CARRIER.  I ALSO THANK THE MINISTRY OF TOURISM FOR ITS CONTINUED SUPPORT OF THE NATIONAL FLAG CARRIER AND CONTINUE TO ENCOURAGE THEM.

MR. SPEAKER, IF WE ALL SUPPORT OUR NATIONAL FLAG CARRIER AND GET SOME DEGREE OF COOPERATION FROM THE UNIONS, IT WILL COST THE PUBLIC TREASURY LESS TO KEEP IT AFLOAT AND THE BAHAMIAN TAX PAYER LESS TO KEEP IT FLYING.

MR. SPEAKER, I TRULY EXPECT THAT THROUGH THIS LATEST ACQUISITION AND PURSUANCE OF OUR RESTRUCTURING PLAN WE WILL SEE THE EMERGENCE OF A BETTER AND MORE EFFICIENT BAHAMASAIR.
THANK YOU, MR. SPEAKER!