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IFC Successfully Concludes Public-Private Partnership Between the Government of Jamaica and Caribbean Airlines for the Privatization of Air Jamaica


In Washington, D.C.:
Jeanine Delay, IFC

Phone: (202) 473-6664

E-mail:
jdelay@ifc.org

Adriana Gomez, IFC

Phone:  (202) 458-5204

E-mail:
agomez@ifc.org


Kingston, Jamaica, May 17—IFC, a member of the World Bank Group,  successfully completed its role as lead advisor to the government of Jamaica in the structuring of the privatization of Air Jamaica, that culminated with the recent signing of an agreement between Jamaica’s government and Caribbean Airlines, the national airline of Trinidad and Tobago.

The privatization of Air Jamaica will make a significant contribution to stabilizing Jamaica’s public finances by eliminating the government’s subsidy of the airline’s operations. The public-private partnership will transfer full financial responsibility of Air Jamaica to Caribbean Airlines, but not any of Air Jamaica’s past liabilities. Over the last three years, Air Jamaica recorded more than $300 million in losses and showed an accumulated deficit of over $1.5 billion as of end 2009.  Air Jamaica has suffered losses for 40 of its 42 years of operation.  


Under the terms of the agreement, the government of Trinidad and Tobago is expected to invest $50 million in Caribbean Airlines’ equity capital in order to fund its new Jamaican operations.


The Jamaican government will receive a 16 percent minority interest in Caribbean Airlines—post capital increase—in compensation for the transfer of Air Jamaica’s market share and goodwill to Caribbean Airlines. The government will  retain ownership of Air Jamaica’s real estate and industrial assets.


During the transition period, Air Jamaica will continue to operate under contractual arrangement with Caribbean Airlines.  This will protect the routes of greatest importance to Jamaican travelers and tourists making connections to Jamaica.


“We believe that this transaction offers a unique, historic opportunity to create a true Caribbean air carrier, leveraging the expertise and strengths built up by Air Jamaica and Caribbean Airlines in a fierce global market environment,” said Air Jamaica Chairman, the Honorable Dennis Lalor.


“The agreement reflects the extraordinary commitment of the government to a more sustainable future for the Jamaican people,” said Richard Cabello, Head of IFC Advisory Services in Infrastructure for Latin America.  “This is a good example of how public-private partnerships can help countries overcome economic challenges.”


Since 1989, IFC has worked on more than 265 infrastructure advisory projects in 84 countries.  Mandates completed in fiscal year 2009 alone have benefited 8.9 million people, yielded fiscal savings of $360 million, and leveraged $1.7 billion in private investment.


For more information about IFC’s infrastructure advisory activities, visit
www.ifc.org/infrastructureadvisory.

About IFC

IFC, a member of the World Bank Group, creates opportunity for people to escape poverty and improve their lives.  We foster sustainable economic growth in developing countries by supporting private sector development, mobilizing capital for private enterprise, and providing advisory and risk mitigation services to businesses and governments.  Our new investments totaled $14.5 billion in fiscal 2009, helping channel capital into developing countries during the financial crisis.  For more information, visit
www.ifc.org.