Kingston -- Feb. 11, 2010 -- Shortly after taking office, the Government announced the decision to divest Air Jamaica. This decision was consistent with a commitment stated in our Manifesto as part of necessary measures to relieve the taxpayers of the burden of loss-making state-owned enterprises that were not considered part of the core functions of government.

Since its inception in 1969, Air Jamaica has accumulated losses of over US$1.4 billion or J$126 billion. In the last 3 years alone, it has incurred losses of US$337 million or J$31 billion.

The economic programme that is required to put Jamaica in a position to achieve sustained growth including the containment and ultimate reduction of our huge public debt does not allow any continued absorption of these losses.

In pursuance of this decision, the Government established a Privatization Committee headed by the Hon. Dennis Lalor to oversee the divestment of Air Jamaica. The other members of the Committee are Mr. Richard Byles, Mr. Colin Steele and Mr. Christopher Berry. Mr. Dennis Chung was appointed Project Manager for the divestment. The Government engaged the services of the International Finance Corporation (IFC) which then engaged a group of premier aviation consultants to advise on the divestment process.

An Invitation for Expression of Interest was issued in April 2008 simultaneously with the launch of the Air Jamaica Privatization website (airjamaicatrasaction.org) which contained detailed information that potential interests would require. Seven companies responded. Of these, four were considered to have fulfilled the technical and financial criteria as stated in the published invitation.

In October 2008, an 87-page Information Memorandum was issued providing detailed information on:

• the divestment process and evaluation criteria;


• Air Jamaica's organizational structure, operations and financial performance;


• information on Jamaica's economy and demographics;


• the aviation market with particular reference to the Jamaican and Caribbean environment;


• applicable regulatory framework.

Two of the four companies, Caribbean Airlines and Indigo Partners, visited Jamaica to conduct due diligence exercises and these were fully facilitated by the Air Jamaica authorities.

At the extended deadline for submission of firm offers, June 30, 2009, two bids were received from Caribbean Airlines and Indigo Partners. These were evaluated against the stated criteria and scored under four headings:

1. Probability of transaction completion


2. Requirement for ongoing GoJ support


3. Financial outcome to GoJ


4. Proposed Business Model

On conclusion of the evaluation, Indigo Partners were evaluated as marginally superior to Caribbean Airlines.

Based on these findings, the Cabinet gave approval for negotiations to be entered into with Indigo Partners. These negotiations continued for more than four months but the parties were not able to reach a satisfactory agreement.