AMI loses less in 2015

In this Journal file photo, an Air Marshall Islands Dornier during a stop at an outer island.
In this Journal file photo, an Air Marshall Islands Dornier during a stop at an outer island.

Air Marshall Islands reduced its operating losses in 2015, but still lost nearly a million dollars, according to the latest audit of the national airline.

The audit shows that AMI increased its operating revenues in 2015, from $2.1 million the previous year to $2.5 million. Airline spending remained about the same in 2015, at over $3.3 million. The airline lost $845,503 in 2015 — an improvement over the $1.2 million lost the previous year. For the four years, 2012-2015, AMI sustained operating losses totaling $4.5 million for an annual average loss of over $1.1 million.

Heavy government subsidies have kept the airline operational. In 2015, the government increased its funding subsidy to AMI by 244 percent, injecting $4.1 million into the airline. This compares with a $1.2 million subsidy in 2014.

The 2015 subsidy included:

• $1,916,903 to pay debts: $935,545 to the Marshall Islands Social Security Administration, $943,373 to pay an MIDB loan, and smaller amounts to pay off insurance debts. The MISSA payment is a portion of the $1.4 million AMI owed MISSA in 2015, which was the subject of a court ordered settlement.  “The government guaranteed the MIDB loan and started paying it off on behalf of AMI in 2014 with the understanding that as soon as things get better for the company…the company will then start making payments towards the loan,” said AMI.

• $2,219,661 for airplanes and parts: $1.9 million for the second hand Dornier purchased in Nepal in 2015; $290,422 for ground service equipment; and $29,239 for engine parts.

AMI struggled to use the Dash 8 efficiently. “The Dash 8 has not been making money due to low utilization,” AMI said, adding that it was averaging under 25 percent usage since it returned from a major overhaul in Australia. This was caused by “lack of spare parts on shelves due to lack of money, and from impact of the bad outer island airport runways, which continue to cause breakdown of the aircraft thus effectively preventing it from generating the income it needs in order to pay off its own loan and to help support the (airline) operation.”

The lack of parts on hand and constant breakdowns caused both Dornier and Dash 8 to be grounded repeatedly in 2015, which prevented “a steady flying schedule, thus continuing to prevent AMI from earning consistent income.”

AMI said in the management report that key issues for the airline continue to be the need to:

• Improve outer island runways to reduce damage to AMI planes.

• Purchase more spare parts to have on hand to reduce time on the ground for planes.

• Fix the deteriorating Majuro airport hangar, and to house AMI operations under one roof to improve efficiency and save money.

Read more about this in the February 17, 2017 edition.