Air Jamaica in the Hands of Jamaican Government

The government of Jamaica has assumed sole ownership and management of Air Jamaica, which accounts for 51% of air traffic into the island, after Caribbean all-inclusive resort kingpin Gordon "Butch" Stewart and his business group, pulled out of the carrier.

All members of the board of directors of Air Jamaica Acquisition Group (AJAG) and Air Jamaica Holdings -- including chairman Stewart and chief executive and deputy chairman Chris Zacca -- stepped down December 23. They had controlled about 78% of the airline.

A new 10-member interim board appointed by the government to serve through June 30 includes Paul Pennicook, executive director of the Jamaica Tourist Board in Kingston.

In an internal memo to airline staff, Stewart said "ongoing turbulence" in the airline industry had "imposed tremendous strain" on AJAG resources for 10 years, rendering its continued involvement "untenable."

But Jamaican minister of finance Omar Davies said Stewart -- who financed most of the $27 million AJAG paid for a stake in Air Jamaica in a 1994 privatization -- agreed to invest another $20 million in the struggling airline for working capital and to write down debt.

Davies also said the Jamaican government will back $25 million in loans to Air Jamaica to finance restructuring, with an eye toward attracting "equity capital from private investors."

The minister added that the government "has no desire to retain permanent ownership and control of Air Jamaica."

Jamaican media reported that Air Jamaica has debts totaling $560 million and would require an additional $270 million in funding to weather the next five years. At press time, neither Stewart nor AJAG officials were available for further comment.