Air Jamaica, is to implement a number of cost-cutting measures and general revamping of operations in order to keep the airline viable at a time when escalating costs means that the industry world-wide may lose US$5 billion this year. Speaking at a media briefing yesterday held at Air Jamaica's Kingston headquarters, Chief Executive Officer, Christopher Zacca said: "We are targeting a cost re-duction of US$50 million in our new business plan. We are now looking at every area of the airline both strategically and tactically, from fuel management, staff, finance, routes, maintenance, leases and our regulatory framework. We have to find both innovative and aggressive ways to cut down costs." COMMITMENT TO CUT COSTS Mr. Zacca added: "That's what the environment demands in terms of the increases in fuel and fall-out in the number of people travelling by air. We have given a commitment to cut costs and we will do so". Air Jamaica has solicited the services of Sabre Consulting, an American firm, at a fee of US$300,000 to re-evaluate its business plan in light of these cost-cutting measures. Sabre Consulting will be looking at the constituents of the business plan, more importantly revenues and costs and working with Air Jamaica to examine all aspects of its operations to determine the most efficient way to run the airline. This undertaking will take about a month. Already the airline has cut its schedules by 15 per cent until December 15 which will save it US$8 million in costs but it will have to forego US$5 million in revenue. This US$50 million cost-saving ac-counts for 10 per cent of Air Jamaica's total costs. Fuel, staff and leases account for approximately 70 per cent of operational costs. Last year's operating expenses were as follows: fuel 15 per cent which amounted to US$73 million; staff 21 per cent, maintenance 11 per cent; leases 13 per cent; handling and throughput, seven per cent; commissions five per cent; passenger meals, four per cent; advertising, three per cent; security, one per cent, others, 20 per cent. With oil prices now in the US$50 per barrel range, Air Jamaica is expecting a fuel bill of US$105 million this year which will account for 25 per cent of its costs. Mr. Zacca is looking for the airline to make a cost-saving of US$15 million from staff give-backs from which he is hoping the majority will come from pilots. Air Jamaica pilots enjoy the reputation of being one of the highest paid in the industry. The company has been in protracted negotiations with its pilots with the aim of reducing their salaries; however the pilots are insisting on a five per cent increase in their salries. The airline finds itself beset by an ongoing series of calamities. The terrorists attacks of September 11, 2001, on the United States, saw it having to trim costs by US$30 million. Then came the outbreak of the SARS disease, followed by escalating fees and oil prices and now four hurricanes in quick succession. It now finds itself owing the banks US$100 million with interest costs between US$10 million and US$15 million a year. It needs a further US$15 million in order to facilitate short-term cash flow. Mr. Zacca said Air Jamaica's financing costs are higher than most of its competitors and that it may need to take on more debt at lower interest rates. He took the opportunity to stress that although at one time landing fee payments were a problem this is no longer the case with payments now up to date. He said negotiations are currently underway that will see the Government increase its stake in the airline to 45 per cent with the 'Butch' Stewart-controlled Air Jamaica Acquisition Group (AJAG) holding the remaining 55 per cent. Mr. Zacca made it clear that despite having to take cost-cutting measures there are no plans to increase air fares. SOURCE: JAMAICA-GLEANER.COM