Caribbean Airlines has taken over financially beleaguered Air Jamaica after months of negotiations between the two island carriers.

"We proposed that Caribbean Airlines was a natural ally and the best choice to serve the needs of the Jamaican population," Caribbean Airlines CEO Ian Brunton says.

A final agreement between the two carriers was reached April 28, following a letter of intent that was signed in January. One of the stated goals was to produce a single regional carrier in the Caribbean.

Under terms of the deal, the government of Jamaica will assume responsibility for closure costs related to Air Jamaica, which are estimated at more than $800 million.

Caribbean will take over the carrier's frequent flyer programme and will continue to honor Air Jamaica tickets. The government of Jamaica will own 16% of Caribbean Airlines.

Air Jamaica's initial operations will continue existing routes. From Montego Bay, flights will continue between New York-JFK, Baltimore-Washington, Philadelphia and Fort Lauderdale. From Kingston, the airline will continue operating to New York-JFK, Toronto and Fort Lauderdale.

The governments of Trinidad and Tobago will contribute $49.2 million to Caribbean Airlines to use as working capital to facilitate the merger. Some 900 Air Jamaica employs will be retained to manage eight routes currently operated by the Kingston-based carrier.

Air Jamaica chairman, Dennis Lalor, says the final offer was improved from Caribbean's initial bid and superior to a rival bid by Indigo Partners.

"We believe this transaction creates a unique, historic opportunity to create a true Caribbean air carrier," Lalor says, "leveraging the expertise and strengths built up by Air Jamaica and Caribbean Airlines to be able to compete in a fierce global market environment."

Source: Air Transport Intelligence news