Bahamasair's nearly $24 million net loss during the 2012/2013 fiscal year, combined with its deficit and liabilities, have cast further "significant doubt" on the airline's future, according to a recently released auditor's report.
In its "emphasis of matter" paragraph in the report, independent auditor HLB Galanis & Co. expressed doubt that Bahamasair can continue as a going concern without government subsidies despite a six percent increase in airline revenues. The airline operated at a net loss of $23.788 million, with a deficit of $539,410,368, and liabilities exceeding current assets of $22,685,284.
"These conditions, along with other matters indicate the existence of a material uncertainty, which may cast significant doubt about Bahamasair's ability to continue as a going concern without the continued financial support of the shareholder," notes the report.
Bahamasair Managing Director Henry Woods states in the report that the fiscal year could be viewed as a "modest success", with net losses $2.78 million lower than the previous year, a 10.7 percent reduction in customer complaints and an on-time performance average of 71 percent.
Total revenues improved by $3,807,234, or six percent, while revenue from passenger ticket sales grew by $3,528,988, up six percent for the year. Annual passengers grew by four percent up to 818,000. Meanwhile, average fares increased by one percent up to $74.35 per sector. Operating expenses grew 1.2 percent to $95.129 million while depreciation and obsolescence costs soared during the fiscal year, more than doubling from $997,672 in 2012 to $2,004,092 in 2013.
Bahamasair Chairman Valentine Grimes addresses the growing talk of privatization of the airline in the report, writing that the airline remains committed to improving airline performance regardless of its future. Deputy Prime Minister Phillip Brave Davis suggested last year that industrial action taken by Bahamasair pilots could push the government to privatize the airline.
"Privatization has become a delicate subject and the prime minister has indicated that there is some interest from various quarters. While we await the outcome of what will happen to Bahamasair we will continue to increase the shareholder value.
Whether we privatize or not we will continue to improve the value of the company by managing costs," he states in the report.
"Unlike prior years, most of the growth resulted from initiatives to regain market share in the domestic market where passenger revenues improved by $2,289,000 (10 percent) compared to the $1,281,000 (3 percent) revenue growth from ticket sales on the international routes," reads the audit.
The airline saw improvements across four family island destinations, with 10 percent increases in revenue with services to Freeport and Marsh Harbour, a six percent increase in Exuma revenues, and a considerable 25 percent improvement in Eleuthera due to reduced outsourcing of flights. Other family island destinations stagnated, however.
"All other domestic destinations produced flat results to the prior year. Management efforts continue to outsource the less dense domestic routes to carriers with smaller aircraft in an effort to reduce losses from these routes," states the report.
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