The Jamaican government does not intend to provide financial support to loss-making flag carrier Air Jamaica when its current fiscal year ends in March.
The government has been trying to re-privatise the state-owned airline since 2008, and is currently negotiating a potential sale with the state-owned flag carrier of Trinidad and Tobago, Caribbean Airlines.
Jamaican Prime Minister Bruce Golding told the Jamaican parliament on 10 February that the government "will not be able" to support Air Jamaica after next month, according to the government's Jamaica Information Service.
Golding says Air Jamaica has incurred losses of $337 million during the past three years and that the carrier has accumulated more than $1.4 billion in losses since its inception in 1969.
His remarks come as Golding says a non-binding letter of intent has been signed for Caribbean to buy Air Jamaica. The targeted completion date for the transaction is 31 March.
Air Jamaica may not be the only acquisition on Caribbean's radar.
"Caribbean Airlines is seeking to expand its regional operations and there is the possibility that it will eventually merge with other regional airlines to become a truly regional carrier for the Caribbean," Golding says.
While a Caribbean spokeswoman declined to comment, Caribbean chief executive Ian Brunton said in October 2009 that though he foresees no immediate changes to the carrier's present strategy, Caribbean is constantly seeking consolidation and growth opportunities.
Last month Brunton and other Caribbean executives met with management and majority shareholders from Antiguan operator Liat to discuss the need for closer cooperation between the carriers. The parties agreed to put measures in place immediately for further direct discussions between Liat and Caribbean management.
"The focus of the planned meetings will be to explore the nature and extent of LIAT and CAL [Caribbean Airlines] cooperation in the best interests of the Caribbean region," Liat says.
Trinidad and Tobago formed Caribbean to replace loss-making BWIA in January 2007.