LESS THAN three weeks before the end of another government deadline to divest the cash-strapped national airline, Parliament yesterday approved government loan guarantees amounting to US$101.8 million (approximately $J9 billion) to Air Jamaica Limited.

Providing an update on the privatisation of the airline in Gordon House yesterday, Finance and Public Service Minister Audley Shaw said the administration was now engaged in aggressive negotiations with potential partners for the acquisition of the airline. He said two of those were very serious proposals, which would shortly be presented to Cabinet.

Missed divestment target

The Government missed its first target of March 2009 to divest the airline.

"We do have a credibility problem in the sense that a deadline was given, the deadline hasn't been met and now we are faced with the assumption of providing guarantees of over 100 million US."

The Government was given a new June deadline to divest the airline.

Shaw yesterday refused to comment on whether the administration would meet the new target, saying making sure things were done properly was more important.

Shaw pointed out that the loan would position the airline to achieve profitability by next year and break-even by summer.

The finance minister said efforts were also being made to increase the average utilisation of aircraft from eight to 10 hours per day.

However, a document tabled by the ministry of finance today showed a reduction in the utilisation of the airline's aircraft from 7.8 hours per day in April 2008 to 7.7 hours per day in April this year.

Meanwhile, at least six financial institutions have lined up to provide the loan to the national airline.

Dr Davies urged the Government to take a second look at the interest rates being charged by the entities.

He indicated that the Government could negotiate more attractive interest rates with the banks.

The country's two leading financial institutions, the Bank of Nova Scotia and the National Commercial Bank are offering Air Jamaica loans at rates of 22.5 per cent and 23 per cent per annum, respectively. Shaw agreed.