bahamiangoddess
06-30-08, - 10:54 AM
June 30th, 2008
Bahamasair Owed NIB $6.5M
A $6.5 million amount owed to the National Insurance Board was one of the chief debts of Bahamasair, according to the financial statements for the fiscal year that ended on June 30, 2007.
The national flag carrier has been perpetually supported by government subsidies and has an accumulated deficit of $413.9 million, the statements show.
The independent auditors acknowledged that the company failed to pay certain contributions under the National Insurance Act and consequently may be liable, on conviction, for fines and penalties as prescribed under the act.
"Contributions were not paid from October 1990 through October 1997, but were accrued for the period mentioned," the statements noted. "The full amount of the delinquent contributions and the assessed interest penalty totaling $6,554,390 (2006: $6,528,126) is included in the accounts payable and accrued expenses on the balance sheet."
The national insurance board has been dealing with the challenge of companies that have not met their regular payment obligations; many of them are behind by several years.
National insurance payments is not the only financial responsibility saddling the airline. Steep fuel costs has dogged airlines around the world, leaving them scrambling to reduce costs.
The statements show that for the financial year under review, aircraft fuel cost the company $18.5 million for the year that ended on June 2007. In the previous period the fuel cost was $21.4 million.
Both the minister responsible for Bahamasair Neko Grant and Prime Minister Hubert Ingraham have lamented that the airline is a considerable burden on the public purse.
For more than two decades, the public treasury has provided subsidies to Bahamasair, in excess of $20 million per annum. Last June, Parliament approved a subvention of $11 million to Bahamasair, for fiscal year 2007-2008.
Between July and December, Bahamasair spent $7.14 million of its original budgetary allocation. Of that amount, $3.99 million was spent on the airline’s long-term debt service obligations and $3.15 million on balances outstanding to US-based vendors.
Among the key challenges facing the airline, are the high cost of fuel – which has significantly inflated the cost of doing business – and an aging fleet, the maintenance of which is very costly.
In the 2008/2009 budget the government is providing $80 million in sundry capital expenditure, a portion of which will be used to make the payments to Bahamasair. In the budget allocation, the airline has gotten $28 million.
"We fully expect any shortfall in Bahamasair’s financial needs to be met by its business operations. We don’t expect them to come back," Prime Minister Ingraham said at the time about the situation.
For the 12 month period that ended on June 30, 2007, Bahamasair incurred a net loss of $15.9 million as it continued to experience substantial recurring losses. Also, up to that point, the company’s current liabilities exceeded its current assets by $57.5 million and its total liabilities exceeded its total assets by $53 million.
"These factors raise significant doubt as to whether the company will be able to continue as a going concern without the continued financial support of the government," the audited report noted.
Bahamasair Owed NIB $6.5M
A $6.5 million amount owed to the National Insurance Board was one of the chief debts of Bahamasair, according to the financial statements for the fiscal year that ended on June 30, 2007.
The national flag carrier has been perpetually supported by government subsidies and has an accumulated deficit of $413.9 million, the statements show.
The independent auditors acknowledged that the company failed to pay certain contributions under the National Insurance Act and consequently may be liable, on conviction, for fines and penalties as prescribed under the act.
"Contributions were not paid from October 1990 through October 1997, but were accrued for the period mentioned," the statements noted. "The full amount of the delinquent contributions and the assessed interest penalty totaling $6,554,390 (2006: $6,528,126) is included in the accounts payable and accrued expenses on the balance sheet."
The national insurance board has been dealing with the challenge of companies that have not met their regular payment obligations; many of them are behind by several years.
National insurance payments is not the only financial responsibility saddling the airline. Steep fuel costs has dogged airlines around the world, leaving them scrambling to reduce costs.
The statements show that for the financial year under review, aircraft fuel cost the company $18.5 million for the year that ended on June 2007. In the previous period the fuel cost was $21.4 million.
Both the minister responsible for Bahamasair Neko Grant and Prime Minister Hubert Ingraham have lamented that the airline is a considerable burden on the public purse.
For more than two decades, the public treasury has provided subsidies to Bahamasair, in excess of $20 million per annum. Last June, Parliament approved a subvention of $11 million to Bahamasair, for fiscal year 2007-2008.
Between July and December, Bahamasair spent $7.14 million of its original budgetary allocation. Of that amount, $3.99 million was spent on the airline’s long-term debt service obligations and $3.15 million on balances outstanding to US-based vendors.
Among the key challenges facing the airline, are the high cost of fuel – which has significantly inflated the cost of doing business – and an aging fleet, the maintenance of which is very costly.
In the 2008/2009 budget the government is providing $80 million in sundry capital expenditure, a portion of which will be used to make the payments to Bahamasair. In the budget allocation, the airline has gotten $28 million.
"We fully expect any shortfall in Bahamasair’s financial needs to be met by its business operations. We don’t expect them to come back," Prime Minister Ingraham said at the time about the situation.
For the 12 month period that ended on June 30, 2007, Bahamasair incurred a net loss of $15.9 million as it continued to experience substantial recurring losses. Also, up to that point, the company’s current liabilities exceeded its current assets by $57.5 million and its total liabilities exceeded its total assets by $53 million.
"These factors raise significant doubt as to whether the company will be able to continue as a going concern without the continued financial support of the government," the audited report noted.