CARIBBEAN Airlines (CAL) has opted not to exit its contract to lease 12 Max 8 aircraft from the Chicago-based manufacturer, Boeing.
Board-level sources at the airline told the Sunday Express that CAL was presented with an opportunity to exit the contract at the beginning of this month, without incurring any penalty but the beleaguered carrier opted to maintain its present contract.
CAL has been waiting on the necessary approval from the regulators as the lease doesn’t allow “the lessor to deliver an aircraft which is not certified by the regulator”.
Last December, the Max 8 was cleared for flying after 20 months of being grounded by the Federal Aviation Authority of the United States (FAA). In the interim, CAL sources said the airline plans to reduce its jet fleet from 12 to nine and has already returned two of its current 737 aircraft to lessors with another to be returned shortly.
All leases for the nine existing aircraft have been extended for at least another year until the company can take receipt of the Max 8 aircraft, the Sunday Express was told.
The board-level source said the final word on the contract for new aircraft would come from Cabinet, but deciding to opt out of the Max 8 lease could result in the airline having to wait more than five years for similar new aircraft from Boeing’s European competitor, Airbus.
Finance Minister Colm Imbert did not respond to queries from the Sunday Express on the subject.
When contacted by the Sunday Express last week, CAL’s communications manager Dionne Ligoure would only say that the airline was exploring all options at this time.
The Max 8 aircraft, which suffered two fatal crashes in March and October 2019, is already being used in the United States and in Canada.
In January, Transport Canada announced it has completed its nearly two-year review of the aircraft and has issued an “airworthiness directive” detailing a series of changes that must be made before the Max can return to Canadian airspace. The department said it will complete the final step of the process to clear the plane by lifting a notice to airmen (NOTAM) banning commercial flights of the Max in Canada.
But last Friday, Bloomberg reported that Boeing has found potential electrical flaws in two additional areas of the 737 Max 8 cockpit, a week after a similar manufacturing defect prompted a temporary flying halt for recently delivered jetliners. Bloomberg reported that Boeing had inspected the Max’s flight deck for other electrical faults near the flaw revealed last week.
“Still, the discovery of new problems adds to the embarrassment for Boeing, which is trying to engineer a smooth return for the Max after a 20-month grounding forced by two deadly crashes. The electrical issue potentially affects about 450 Max jets manufactured since early 2019, including about 90 aircraft operated by airlines with the rest still awaiting delivery,” Bloomberg reported.
Boeing said it “is working with customers on service bulletins that will be submitted to the FAA for approval. The bulletins focus on ensuring a sufficient ground path in the flight deck of affected airplanes.”
Despite being grounded, Boeing did not stop manufacturing the aircraft and spent almost two years ironing out issues with the aircraft’s flight control computer, wiring and engines, to meet FAA’s standards and requirements.
US carriers have been adding the 737 Max back to their schedules with Southwest being the latest when it resumed flights March 11.
CAL’s changing fleet
CAL’s current fleet comprises 12 Boeing 737-800s, one of the safest and most popular planes.
In November 2018, CAL announced that it had leased 12 of Boeing’s Max 8 to replace its old fleet and had made a downpayment of US$7 million for the new planes.
CAL was supposed to take receipt of the first Boeing aircraft in December 2019.
But Boeing’s Max 8 aircraft have been grounded since the crash of two aircraft — the Lion Air Flight 610 in October 2018 in Indonesia and Ethiopian Airlines Flight 302 in March 2019 in Ethiopia which killed a total of 346 people. Boeing has had to address issues with the aircraft’s flight-control system which appears to have played a role in both crashes.
The Sunday Express understands that CAL has been reviewing the Boeing leases with US-based and UK-based attorneys following the global grounding of the aircraft but that the contract remained in force.
At a post-Cabinet media briefing in 2019, Imbert, in his capacity as line minister for CAL, as well as Corporation Sole, had said he gave the state airline a directive to review the contract and “get international assistance from aviation experts,” particularly lawyers specialising in aviation law, to look at the terms and conditions of the contract.
“One of the obvious conditions must be that the aircraft must be certified as fit for purpose. In the current situation, with the (US regulator) Federal Aviation Authority grounding the aircraft, clearly these aircraft would not be fit for purpose today. We do not know what it will be like in December,” he had said.
“CAL has been instructed by me to get the best legal advice in the world regarding these leases and also to put contingency arrangements in place with the aircraft leasing companies (for) alternative aircraft in the event that, as we get closer to December, the FAA decides there is a permanent problem with the aircraft,” he said, noting that the decision by the FAA to ground these jets is temporary.
Meanwhile, CAL’s profitability has been impacted by the Covid-19 pandemic with the airline posting an operating loss of US$109 million in 2020. CAL announced its unaudited financial results for the year to the end of December 2020, which showed an operating loss of $738 million (US$109.2 million) on revenue of $802 million (US$118.6 million).
“The first two months of 2020 continued our upward trajectory of the previous three years and the next phase of our strategic plan was commencing strongly.
“However, Covid-19 has taken a sledgehammer to international travel and tourism for the past ten months and our financial results for last year fully reflect this new reality,” said chief executive Garvin Medera. In a media briefing in February, Imbert had said: “Covid-19 has also adversely affected the air transportation sector, requiring subsidy by the Government of Caribbean Airlines to the tune of $700 million over the last year. The Airports Authority is also haemorrhaging, since with the borders being closed it is earning little or no revenue, while incurring significant operational costs.”
Since Covid-19 hit the Caribbean in March 2020, the airline’s flights dwindled as borders were closed to contain the spread of the virus. T&T’s borders closed on March 23 and have remained closed except for cargo flights and repatriation flights.
With T&T unable to be a hub, CAL set up a temporary hub in Barbados to service the Eastern Caribbean. CAL’s fleet, which comprises Boeing 737-800 and ATR72-600 aircraft, has remained, for the most part, grounded.
Caribbean Airlines Ltd said if an investigation of the Boeing 737 Max 8 determines the aircraft to be unsafe, it will cancel any plans to order 12 of the planes.
In a statement issued March 14, 2019, CAL said:
“Caribbean Airlines wishes to definitively state as follows:
(i) The airline has an impeccable safety record, due in no small part to the use of very reliable equipment, an extremely well trained team, and a first class Maintenance and Engineering department;
(ii) The airline does not fly the Boeing 737 MAX 8 aircraft;
(iii) The airline will not, and in fact cannot, introduce any aircraft into its fleet that does not meet the most stringent international and domestic regulations;
(iv) If the Boeing 737 MAX 8 aircraft fails to meet any of the very stringent requirements, it will not, and in fact cannot, be added to the fleet;
(v) Caribbean Airlines’ international aviation consultants, attorneys, and management are closely monitoring the situation, and will take all required steps to continue to safeguard the airline, its customers and staff.
In the meantime, Caribbean Airlines is doing all that it reasonably can, to accommodate on its aircraft, those passengers of other air carriers who may be affected by the grounding of the Boeing 737 MAX 8.
We sincerely thank all stakeholders for the continued confidence placed in the National Airline of Trinidad and Tobago.