Published On: Thu, Jan 17th, 2019

Life support

Hilbert HaarBy Hilbert Haar

Insel Air is one step away from bankruptcy. That much is clear from the recent ruling by the Court in First Instance that withheld its approval from the homologation accord with the airline’s creditors.

In December all seemed to look still fine and dandy. Intercaribbean, the Turks and Caicos-based airline founded by Lyndon Gardiner in 1991, offered to finance the agreement to the tune of $11 million. In exchange, Intercaribbean would acquire the shares of Insel Air.

But somehow between that court ruling in December and the deadline for Intercaribbean to present a guarantee for its promises something went wrong. Maybe Intercaribbean got second thoughts, or maybe their financial backers decided to demand a guarantee of their own.

Anyway, the condition was: a signed sales and purchase agreement by April 15, 2019. You’d think that is plenty of time to get you aviation house in order but the court has a different opinion. After all, it demanded in December that Intercaribbean submit its guarantee by January 15 – not three months later.

Now both Insel Air and Intercaribbean are in hot water. Insel Air is facing its seemingly inevitable bankruptcy and Intercaribbean is facing a $500,000 penalty from the court for failing to submit a solid guarantee.

Observers who know more about aviation than I do, wonder why on earth Intercaribbean got involved with the Insel Air drama in the first place but that is, as the saying goes, water under the bridge. Intercaribbean stepped into this quagmire and now it is desperately looking for a way out.

Gardiner’s company has only two options: come up with a solid guarantee – in which case Insel Air will continue to exist – or pay the half million dollar fine. That would be the end of it, first of all for Insel Air and its approximately 400 remaining employees and secondly for Intercaribbean’s involvement.

Right now, we are waiting for the outcome of a possible Intercaribbean appeal against the court’s decision to withhold its approval of the homologation accord. I am not a legal expert but I wonder very much on which grounds the company thinks it will be able to get the ruling overturned.

It is going to be a sad day for Caribbean aviation if Insel Air were to become the next regional airline to disappear. Luckily, it will not complicate the airlift between Curacao and St. Maarten Winair flies the route daily with an ATR aircraft operated by Air Antilles and newcomer to the route Divi Divi Air flies five times a week with a Boeing 737 operated by Corendon.

The government of Curacao will in the meantime question its wisdom to extend that $18 million bridge loan to Insel Air. I understand the reasoning – Insel Air is too important to fail in terms of air connectivity, the economy and employment – but history has proven over and over again that companies that do not manage on their own seldom do better once they are on government’s life support.

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Insel Air on the verge of bankruptcy