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
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
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