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[Barbados, REDjet] Stay put!

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[Barbados, REDjet] Stay put!

Unread post by bimjim » Mon Jun 11, 2012

http://news.barbadostoday.bb/barticlene ... 2011-08-31

[Barbados, REDjet] Stay put!
by Roy R. Morris
11 June, 2012

Owners of REDjet have found out again that there is no easy way out for the hobbled carrier — again.

Barbados TODAY investigations revealed that last night, 24 hours after the airline announced it had officially ceased operations and had filed for protection from its creditors, one of those creditors went to the High Court and effectively blocked it from flying its one remaining plane out of the island.

According to one source, Grantley Adams International Airport Inc. was granted an injunction preventing REDjet from flying its second plane out of the island, after it reportedly flew the other to the United States the day before. The airline operated a third leased aircraft.

GAIA Inc., which is owned by the Government of Barbados, took the step, the source said, as a creditor, which was owned $1.54 million up to March 31 by REDjet. It is understood that the airline would also have incurred substantial parking feels in April and May while its aircraft remained grounded.

The matter is to be heard in the High Court on Tuesday to determine if the temporary injunction will remain in place.

REDjet’s liability to GAIA Inc. is made up of two components — Passenger Service Charge and Landing and Parking Fees. The PSC were paid to REDjet by passengers when they purchase ticket and the airline was required by law to forward that money directly to the airport. GAIA Inc. has made it clear that this money does “not comprise any part of the carrier’s revenue”.

In a statement issued Friday, REDjet said: “Airone Ventures Limited doing business as REDjet hereby announces the suspension of all operations in Barbados. REDjet profoundly regrets this decision and its impact on its suppliers, staff and passengers.

“REDjet believed that it had secured the full aero-political support of the Government and authorities in Barbados and had it gained access to all markets as a designated national carrier this turn of events could have been avoided. However, regrettably this has not been the experience of the airline over the past two years.

“With no consensus at a political or technical level to deliver on these commitments which are critical to the development of any airline there can be no future for REDjet in Barbados. Therefore, despite the best efforts of the airline and its committed staff, the airline has been forced to make the regrettable decision to suspend all its operations.” And while it said nothing about its future plans in that statement, one day earlier Barbados TODAY had published an exclusive report, quoting REDjet official documents whic indicated it was involved in early talks with Jamaica civil aviation authorities about setting up its base there with a new US $25 million plan.

A major part of the effort is reportedly an attempt by REDjet to get a US $10 million financial injection from Jamaica-based Ostrich Investments Cayman Limited. The airline is also said to be banking on US $15 million in shareholder equity, which when combined with the Ostrich funding, which has not yet been secured, would bring its finances for the Jamaica effort to $25 million.

A “REDjet Jamaica sources and uses of funds” document said the major use of these funds would be US$12.6 million for working capital and route development, US$4.2 million for “contingency”, and US$3.1 million for a Jamaican Category 1 Air Operator Certificate. Other allocations were aircraft acquisition and lease deposits US$1.6 million, airport deposits US$1.5, capital expenditure US$1.2 million, electronic commerce deposit US$350,000 and a further US$300,000 for investment in stocks.

Sources said communication between REDjet management and the leadership of Ostrich Investments Cayman Limited was still at an early and delicate stage, but that the airline’s principals had virtually made up their mind to shift focus from Barbados to Jamaica. Further indications were that REDjet would seek to keep its fares as low as possible in an effort to keep its low fares mold.

“If you analyse the load factors of competitors in business plan and what we are targeting,both in building over first six months and beyond, we are below what our more expensive competitors load factors are,” a REDjet document related to the Jamaica effort stated. “However we must assume the competition will react to our fares and so the this itself will stimulate growth in passenger numbers. By adopting this approach we can successfully build load factors over a period of time without creating long term negative issues with consumers,” it added.

Meanwhile, scores of would-be REDjet passengers who are still owed refunds by the airline over the weekend called on the Freundel Stuart Administration to seize its aircraft to guarantee they would not be left holding an empty bag.

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