CAL-ATR deal flawed
By NALINEE SEELAL and CLINT CHAN TACK Thursday, December 23 2010
CANADIAN aircraft manufacturer Bombardier yesterday accused Caribbean Airlines (CAL) of giving preferential treatment to France-based aircraft manufacturer ATR regarding the purchase of nine turboprop planes from ATR. Bombardier was the company which the former PNM government was trying to buy a private jet from for the exclusive use of former Prime Minister Patrick Manning.
Bombardier’s claims were outlined in a letter sent yesterday to Attorney General (AG) Anand Ramlogan. Bombardier’s letter to Ramlogan comes 24 hours before today’s Cabinet meeting where the findings of international aviation expert John Dunne into the controversial deal between ATR and CAL for the acquisition of nine turboprop planes from ATR will be discussed. In Bombardier’s letter to Ramlogan, the company’s director of sales for the Americas, Ross Gray, told the AG the procurement and evaluation processes used by CAL to acquire the ATR planes were flawed.
With respect to the procurement process, Gray said no Request for Proposals (RFP) was issued; no objective criteria was established regarding how competing offers would be evaluated; no time lines were established; preferential treatment/focus was given to ATR and by not running concurrent negotiations with ATR and Bombardier, CAL “likely did not achieve the most favourable terms and conditions possible.” Gray claimed the evaluation process was also flawed because CAL had not given due consideration to where the aircraft would be operated and CAL was evaluating its jets and turboprops as separate fleets rather than as one integrated fleet. Gray said the chronology of events leading up to the signing of the US$200 million deal between CAL and ATR on September 27 started in March 2007. Gray disclosed that at that time, under the former PNM government, he made Bombardier’s first presentation to CAL to purchase its Q400 turboprop plane.
“Up until November 2009, the pace of discussions with CAL was very slow with CAL showing little interest in replacing or augmenting the five Bombardier Q300s it currently operates.” Gray said meetings with CAL were infrequent and virtually all the meetings “were at our own initiative” except for a meeting in February 2008 which was organised at the request of Manning “to discuss the proposed acquisition of a Global business aircraft by CAL for Manning’s use.” Gray said that meeting took place at the Prime Minister’s official residence at La Fantasie in St Ann’s.
He added there were subsequent meetings regarding the acquisition of a private jet for Manning but he was not involved in those talks. On March 18, 2008, the then PNM government announced it was scrapping plans to buy this jet from Bombardier.
Stating that CAL never replied to proposals which Bombardier made in November 2008 for five Q400 and eight C-series planes, Gray said Bombardier made another presentation in January this year to then CAL chairman Arthur Lok Jack and then CEO Capt Ian Brunton. Gray said Brunton advised him in November 2009 that CAL planned to make a decision to replace its Bombardier Q300 planes “with new turboprop aircraft in the next 12 months.”
Gray said at that time, Bombardier learnt that Lok Jack had engaged consultant Frederic Mognetti to assist in CAL’s evaluation of aircraft that might replace CAL’s Q300s, “particularly the ATR72 and the Q400.” He said Bombardier was also advised that ATR would be making its presentation within “a day or so of our presenting.” Gray added that Bombardier was not asked to make CAL a commercial offer for the sale of the Q400s and “we did not do so.”
Gray said shortly after the January meeting this year with CAL, he was advised by Brunton that CAL was “leaning toward the ATR 72s because ATR was offering to put a training facility and a maintenance repair facility for ATR 72s in Trinidad to serve the region and also because the ATR72 was being offered at a very low price.” Gray added that CAL also believed “the ATR 72 was more economical to operate.” Gray said six months ago in July, Bombardier submitted a detailed presentation to CAL which showed the Q400 was more economical than the ATR72.
In August, Gray said Brunton advised him CAL had negotiated a definitive agreement with ATR which would be submitted to Works and Transport Minister Jack Warner “who has oversight of CAL for approval to proceed with an order for nine ATR 72s.”
“We were taken aback to say the least,” Gray said.
Gray said he was further advised by members of CAL’s middle management that “the evaluation process wasn’t being made at the management level” and it was all coming “from the top down with very little, if any transparency.” He said Bombardier made “a best and final offer” to CAL of US$19.7 million (TT124 million). Gray said Bombardier expressed its concerns to Warner about the selection process employed by CAL but “unfortunately, we never heard back from CAL.”
Earlier this month, former works and transport minister Colm Imbert said CAL had not reached any decision about purchasing turboprop planes before the May 24 General Election. This was confirmed yesterday by sources close to the former Lok Jack board.
These sources said CAL was “leaning towards ATR” and the Lok Jack board was only considering buying five planes from ATR and not the nine which was agreed upon after that board resigned at the end of May.
Newsday was informed that the decision to acquire the additional four planes was related to using some of them on Jamaica’s domestic air bridge under the arrangement between CAL and Air Jamaica.
The sources added that purchasing turboprop planes from either Bombardier or ATR was never a top priority for the Lok Jack board because it was talking with Airbus and Boeing regarding the jets which CAL uses.
Brunton was fired as CEO shortly after the new CAL board was appointed and that board asked for a review of the ATR agreement.
This sparked a public war of words between Warner and the board. Ramlogan has advised both sides to remain silent until Dunne submits his report to Cabinet and Cabinet makes a decision on it. Efforts yesterday to contact Gray for further clarification about the letter to the AG were unsuccessful.