By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
More than 20 per cent of the $23.476 million taxpayer subsidy granted to Bahamasair in fiscal 2011-2012 went on a money ‘merry go round’ to pay bills the airline owed to its Government shareholder.
During a year in which the national flag carrier continued to bleed the taxpayer via a $26.569 million net comprehensive loss, some $4.876 million of its annual subsidy was used to pay outstanding ticket taxes and sums owed to the Bahamas Telecommunications Company (BTC).
Some $2.816 million was used to settle ticket taxes payable to the Government, while $1.61 million covered debts owed to BTC. While 21 per cent of the taxpayer subsidy went to cover these bills, the bulk - some $18.468 million - covered vendor payments, effectively keeping Bahamasair airborne.
Henry Woods, Bahamasair’s managing director, admitted in the airline’s annual report, tabled in the House of Assembly yesterday, that its cost savings initiatives were “nowhere near sufficient to offset the increase in expenses”.
Labour, fuel and maintenance costs meant Bahamasair was averaging annual losses of $24 million, and Mr Woods noted: “Annual expenses have increased by $17.508 million between 2005 and 2012, with fuel being the leader from $3.985 million to $17.388 million, and comparable levels of consumption.”
Bahamasair’s total revenues rose year-over-year to $67.451 million for 2012, an increase of 2 per cent or $1.227 million.
Yet this figure was dwarfed by its $93.96 million total operating expenses, a figure equivalent to 139 per cent of top line income - and an increase from the 132 per cent experienced in 2011.
Staff costs, as a percentage of Bahamasair’s revenue, jumped from 41 per cent to 43 per cent, or $29.051 million, in 2012. Aircraft fuel, as a percentage of revenues, also grew from 29 per cent to 32 per cent.
With Bahamasair suffering a $26.569 million net loss for the year to end-June 2012, a $5.046 million or 23.4 per cent increase upon the previous year, the calls for the airline to be privatised, downsized or even closed down are likely to increase, especially given the Government’s current fiscal circumstances.
Adding to this sentiment will be the routine qualification in the annual accounts issued by Deloitte & Touche, which noted that the deficit between current assets and current liabilities had grown from $14.619 million in 2011 to $17.054 million a year later.
Some $515.612 million - more than half a billion - in taxpayer subsidies have been pumped into Bahamasair since its creation, and the annual financial statements reiterate the national flag carrier will cease to function without government support.
The main culprit behind the increased fiscal 2012 loss was the 7.2 per cent, or $6.3117 million, increase in operating expenses, which was led by a $2.551 million rise in fuel costs.
The $1.2 million one-off acquisition of two Boeing 737-500 jets to replace older aircraft also impacted expenses, along with the payment of $1 million in retroactive salaries for three years to cover union contracts.
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