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THURSDAY, JUNE 30, 2022
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‘No bang for the buck’: Insurer eases off motor By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
A Bahamian insurer says it is “shying away” from providing thirdparty motor coverage because “the bang for the buck is not worth it” when returns are weighed against potential losses. Anton Saunders, RoyalStar Assurance’s managing director, told Tribune Business that a risk/reward analysis shows it “makes no economic sense” to build-up a large portfolio of thirdparty drivers because the premium income is so low when compared to the potential multi-million dollar liability payouts if these clients cause a traffic accident resulting in death or serious industry. Pointing out that the average annual third-party motor insurance premium is around $350, yet potential liabilities extend to $30m, he said in a recent interview: “Specific to motor, RoyalStar never had a big market share in motor. The reason being that
* RoyalStar ‘shying away’ from third-party cover * Risk/reward ratio ‘makes no economic sense’ * Premium average $350; liability up to $30m
the premiums are very low. “The average premium for third party motor is $350, and we extending liability up to $30m for policyholders. That makes no economic sense. From a liability side, we try to shy away as much as we can because the risk/ reward is not there in motor. “We don’t have a big enough motor share in The Bahamas to drive the market... We shy away from it because of liability limits, the highest in the Caribbean, and premium. The bang for the buck in liability and premium is not worth it.” Third-party cover has become the staple Bahamian motor insurance product largely because of its relative affordability. These policies cover the insured for against death, medical treatment and vehicle repair costs incurred by other drivers in the
event of a traffic accident that the former is found responsible for causing. Comprehensive insurance, which also covers the insured’s own repair and recovery costs, involves a much higher annual premium payment. Meanwhile, Tom Duff, general manager of rival underwriter, Insurance Company of The Bahamas (ICB), told Tribune Business that reduced claims costs across all its property and casualty business lines resulted in a “better-than-expected” 96 percent year-over-year profit increase to $3.791m for the 2021 full-year. This compared to $1.935m for 2020. Net claims incurred fell by $634,000, or 34.5 percent, compared to 2020, finishing last year at $1.205m and accounted for almost one-third of the profit rise. “It was a SEE PAGE B6
MAKE GOV’T DEBT ‘BEST IN COUNTRY’ * Sir Franklyn: ‘Untenable’ Gov’t paying more than Arawak Homes * Hails Central Bank’s public brokerage reversal as ‘correct move’ * Argues ‘not the time to make it more expensive’ to get Gov’t debt By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net A well-known businessman is arguing that the Government’s securities must again become “the best debt in the country” as he hailed the Central Bank’s reversal of its public brokerage services. Sir Franklyn Wilson, who had been fiercely critical of the banking regulator’s planned move, told Tribune Business it was “untenable” for the Government to be paying a higher rate on its
long-term debt securities when companies such as his Arawak Homes were able to borrow from the same commercial banks “at 5 percent or less”. This, he argued, represented a reversal of the long-standing tradition where government debt attracts the lowest borrowing (interest) costs because lenders have almost complete confidence in its ability to fully repay on time. Government paper, and the interest coupons attached, typically provide
OUTGOING CENTRAL BANK CHIEF WARNS ON ‘PROCEDURAL OVERKILL’ By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net
THE Central Bank’s departing chief enforcer says it is “essential” that The Bahamas continue to beat anti-financial crime regulatory standards but do so without imposing “procedural overkill” on low-risk clients. Charles Littrell, the
outgoing banks and trust companies inspector, in a June 27, 2022, letter that detailed the “progress” made during his five-year term, said the financial services industry had successfully caught up on “identified shortcomings” in its anti-money laundering and financial crime defences. “We have yet to become SEE PAGE B5
the benchmark or standard against which private sector loans, bonds and other debt is priced, but this no longer prevails thanks to the postDorian and COVID debt blow-out. Those twin crises merely worsened a fiscal situation that had been deteriorating prior to 2019, and Sir Franklyn’s point was illustrated by the Government’s latest Bahamas Registered Stock issue. Virtually all the $17m raised was via 20 and 30-year bonds, which SEE PAGE B4
SIR FRANKLYN WILSON
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HOTEL UNION AIMS TO CLOSE ‘FOUR OF FIVE’ THIS SUMMER By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net The hotel union’s president yesterday said it is targeting “by summer’s end” to conclude negotiations on at least four of five outstanding industrial agreements in a bid to ease “tremendous pressure” on workers. Darrin Woods, the Bahamas Hotel, Catering and Allied Workers Union’s (BHCAWU) chief, told Tribune Business that apart from the deal with some of The Bahamas’ major resort employers it is also seeking to complete a series of agreements with smaller properties and hotels in an effort to alleviate some of the inflationary pressures on his members.
The other industrial talks are being held with three separate restaurants, he added, namely Kentucky Fried Chicken (KFC or Restaurants Bahamas), Graycliff and the Poop Deck. And discussions are also taking place on behalf of BHCAWU members with the Harborside and Best Western properties, as the union seeks salary and benefit adjustments that can at least partially offset the cost of living crisis. “It’s putting them under tremendous pressure,” Mr Woods told this newspaper of heightened inflation. “You look at the price of gas. We saw Esso has decided to pay attention to people rather than profit to quote them. SEE PAGE B5
UNIONS HOLD OFF ON LIVEABLE WAGE PUSH
By NEIL HARTNELL Tribune Business Editor nhartnell@tribunemedia.net TRADE unions are not pushing to “immediately implement” a livable wage despite The Bahamas’ deepening cost of living crisis, a labour leader affirmed yesterday, saying: “No one wants to kill the hen that lays the golden egg.” Obie Ferguson, the Trades Union Congress (TUC) president, told Tribune Business he and the wider labour movement are adamant that they will “do nothing that damages The Bahamas” and its fragile post-COVID economy despite agreeing that the $2,625-$3,550 monthly livable wage
OBIE FERGUSON, the Trades Union Congress president. recommended by researchers represents a starting point for talks on the issue. But while the high cost of living, driven by widespread inflationary pressures that have sent food, gas and other SEE PAGE B4
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THE TRIBUNE
Bahamas First ratings reaffirmed by AM Best BAHAMAS First yesterday saw its financial strength and creditworthiness reaffirmed by the insurance industry’s top credit rating agency due to its “strong” balance sheet and “adequate operating performance”. AM Best, in a statement, upheld the Bahamian property and casualty underwriter’s financial strength rating of A- (excellent) and the longterm issuer credit ratings of ‘a-’ (excellent). The same ratings were applied to its two subsidiaries, Bahamas First General Insurance Company and Cayman First Insurance Company, with the outlook for all credit ratings kept ‘stable’. “The ratings of Bahamas
First and Cayman First reflect the group’s consolidated balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM),” AM Best said in outlining the rationale for its assessment. “The balance sheet strength is derived from the group’s riskadjusted capitalisation being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This assessment is partially offset by the group’s high reinsurance dependence to protect its surplus and earnings in the event of major catastrophic events. “Surplus growth during 2021 was primarily driven by
underwriting gains at Bahamas First General Insurance. However, this was limited due to dividends paid to Bahamas First Holdings to service its outstanding debt, as well as a decrease in overall earnings at Cayman First compared with prior years. In addition, continued unrealised losses on the group’s Commonwealth Bank equity holdings impacted bottom line surplus.” Turning to Bahamas First’s historical performance, AM Best said: “In non-catastrophe years, the group has a history of solid earnings supported by underwriting gains and investment income, resulting in solid profitability metrics as evidenced by its five-year average return results.
“The group’s operating performance in 2021 was favourable, primarily driven by the property and motor lines of business in The Bahamas and Cayman Islands, though partially offset by an operating loss on the health line of business at Cayman First. The health line of business is usually a significant contributor to overall earnings for the group. However, increased claims during the year resulted in minimal net income at Cayman First. Describing Bahamas First’s business profile as neutral, AM Best added: “Despite operating in highly competitive and mature markets, the group maintains leading market positions and operations in The Bahamas and Cayman
Islands, and benefits from product and geographic diversification, which has helped to stabilise earnings through market cycles and reduce the impact of catastrophic events. “The group’s ERM is considered appropriate. The group has an established ERM framework in place along with a risk committee that is responsible for overseeing its ERM guidelines and policies. “In addition, AM Best anticipates that the group will continue to produce favourable earnings in non-catastrophe years, and that its risk management capabilities and comprehensive reinsurance programme will continue to keep its balance sheet strength at the strongest level.”
Baha Mar unveils its first Culinary and Arts festival BAHA MAR yesterday announced it will host the inaugural Bahamas Culinary & Arts Festival on October 21-23 in a bid to further boost its standing as a destination for these tourism niches. The three-day food event will be headlined by international chefs including Marcus Samuelsson, of Marcus at Baha Mar Fish + Chop House; Daniel Boulud of Café Boulud; and Dario Cecchini of Carna; who will be joined by TV personality Amanda Freitag along with author and restaurateur, Carla Hall, as well as Bahamian chef, Simeon Hall Jr. “We are thrilled to debut The Bahamas Culinary & Arts Festival at Baha Mar, which will highlight the resort as the culinary, art and cultural destination of choice within the Caribbean,” said Graeme Davis, Baha Mar’s president. “This premiere event will allow us to showcase the extraordinary culinarians, as well as artistic creativity found both at Baha Mar and throughout The Bahamas, joined by
international guest stars. “We envision this festival becoming the leading celebration of food and art in the region, providing locals and visitors with the opportunity to fully immerse themselves in the island’s rich culture and gastronomic offerings.” “I’m so honoured to be part of this monumental event, taking place at one of my favourite destinations, Baha Mar,” said Chef Samuelsson. “We’ve set the stage for a truly unforgettable festival, and myself, alongside my colleagues and friends, are excited to continue highlighting the local culinary scene, matched with unique Bahamian art and culture.” The 2022 Bahamas Culinary & Arts Festival will launch with a welcome party hosted by Chef Samuelsson on Friday, October 21. Throughout the weekend, guests will enjoy a two-day culinary and arts expo featuring interactive cooking demonstrations led by Baha Mar’s chefs and guests. There will be new exhibitions by local artisans in partnership with
The Current, Baha Mar’s art gallery, which is curated by executive director of arts and culture, John Cox. A grand dine-around will showcase some 45 restaurants, bars and cafes from Baha Mar and the wider Bahamas. The event will conclude with a special ticketed event for an al fresco dining experience with the festival’s participating chefs and artists on Long Cay, Baha Mar’s private island hideaway. “The Current’s art programmes are one-of-a-kind, with a focus on promoting work from all types of creatives throughout the resort,” said John Cox, art director of The Current Gallery and Art Centre. “We are excited to be a part of The Bahamas Culinary & Arts Festival at Baha Mar, and to continue to share our passion for Bahamian art within the community and our visitors.” Tickets for the event are on sale at bahamar.com/bahamas-culinaryarts-festival/ and are priced upon experience, ranging from $79 to $499.
LARGEST PRIVATE ISLAND FOR SALE BACK ON AUCTION BLOCK
A SOUTHERN Bahamian island billed as the largest private destination for sale in this nation will again be placed on the auction block towards the end of July, it was confirmed yesterday. Little Ragged Island is set to be sold-off to the highest bidder, with no reserve price, when the four-day online auction begins on July 25. “Private islands in The Bahamas have long been regarded as a premier choice for anyone in search of the ultimate getaway, and St Andrew’s or Little Ragged as it is commonly called, is a fisherman’s and diver’s paradise,” said Sotheby’s Concierge Auctions vice-president of business development, Danny Prell. “Located in the Ragged Island chain, the 712-acre island, with its secluded coves and beaches, is unlike anything on the market; away from it all, but only a two-hour flight from Miami. That lends a feeling of true remoteness, while maintaining advantages like easy access from key markets and an English-speaking local population.” Bahamas Realty’s Stuart Halbert, the local realtor for the listing, said development opportunities for Little Ragged are limited only to one’s imagination. “This is the perfect blank canvas for a dream project such as a private residential settlement or a boutique resort with a large marina,” he said.
Mr Halbert added that St Andrew’s has great potential due to its good elevations, beaches and fishing. He said the island could also be home to an eco-resort, describing the natural wildlife as “abundant” and noting that it has excellent snorkeling and diving potential. Little Ragged Island’s location, just a mile from the Duncan Town airport, eases the logistics associated with transporting supplies to the island and accommodating workers while developing it. Though Little Ragged Island was sold in an auction last year, global market conditions have resulted in it being put back for sale. This is not the first time Sotheby’s Concierge Auctions has sold the same property twice. There have been cases, executives said, when a highly desirable property changes hands three times, all by online auction, one of the fastest growing marketing tools for exclusive properties in the real estate world. “One of the reasons we have enjoyed the growth we have, and now the affiliation with the famed international auction master of art and estates, Sotheby’s, not to be confused with the real estate franchise by the same name, is that we are extremely selective in what we accept to represent,” explained Mr Prell. Quality and fair market pricing are key qualifying SEE PAGE B3
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Thursday, June 30, 2022, PAGE 3
DOWN HOME FEEL SPARKS A 33% BRAND EXPANSION
By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
A CONCEPT store that aims to provide a platform for Bahamian entrepreneurs to exhibit their wares has increased its brand membership by one-third within months of opening. Natalie Carey, owner of Down Home, told Tribune Business that since opening last year it has been in consistent expansion mode. She said: “We’ve been open for a
few months now since the grand opening, and since then we’ve expanded from about 30 Bahamian brands in our store to over 40.” Bahamian brands sign up with Down Home to have their goods showcased in the store. “We have a membership model. So everyone that’s in our store is a member in some way, shape or form,” Ms Carey said. “So we go off of a percentage and it’s whatever is greater. So people pay a fee to be in our store on a monthly basis. All of our members have been
able to forego that fee, because they’ve sold more than 15 percent in sales revenue in order to stay on board.” Down Home Bahamas was created to support the local small business community, especially products that needed a retail showcase through which to reach consumers - both local and tourists. Its outlet, located on Parliament Street in downtown Nassau, is home to more than 40 homegrown, Bahamian-owned brands. Ms Carey said: “We exclusively
sell Bahamian-owned products, so when you come in we are right on Parliament Street in a very highly trafficked area. Our goal is to make sure we are up front and centre, and not limit our small business community to the backstreets or to pop-ups. We’re open all year round. “Sales are going fantastic. It’s been a blessing to say that all of our brands have been extremely successful in the store, and that’s why we have been able to expand the way we have. “We think it’s a great
opportunity for those folks who haven’t been able to patronise, or to put their money within the community. There is no better time than Independence Day to show up for the small business community.” To mark Independence Day on July 10, Down Home will be having a sale where all shoppers will receive a free gift. Ms Carey added: “The response we have been getting is great, not only from the cruise lines and from the ambassadors but from the food tours as well.”
No VAT ‘holiday’ makes life harder for building suppliers By YOURI KEMP Tribune Business Reporter ykemp@tribunemedia.net
A BUILDING materials supplier yesterday voiced hope that this year may see another temporary VAT ‘holiday’ so persons can stock up on hurricane supplies even though the Davis administration has given no hint it will reinstate the practice. Constance McKinney, chief financial officer at
Cartwright’s Building Supplies, told Tribune Business that despite possessing “limited supplies” the distributor is staging a 20 percent-off sale to ensure customers can buy hurricane supplies at a cheaper price. But, with no VAT holiday, it will be difficult to pass any more savings to consumers. She said: “It’s always difficult to pass on any savings to the customer. But if the Government
were to say go ahead, like you would normally do in the past, because there was a VAT holiday, that was easier to work with. Hopefully they would review it before everything gets serious, but as I said we do have a 20 percent sale on flashlights and things like that now.” The Minnis administration last year temporarily eliminated VAT on specific hurricane supplies to enable Bahamians to stock-up prior before
peak storm season. Ms McKinney said: “We have stuff this year. Things are coming in daily and it is ongoing, so we may sell out of stuff, but we continually get things coming in.” Christopher Lleida, Premier Importers’ chief executive, said the building materials supplier is well-stocked for hurricane season but remains concerned about his Abaco location’s ability to keep up with demand.
LARGEST PRIVATE ISLAND FOR SALE BACK ON AUCTION BLOCK FROM PAGE B2 criteria, he added. And where auctions were once considered a last-ditch effort, today they are anything but. “Of every 20 properties or estates offered to the online auction firm, Sotheby’s Concierge Auctions turns down 18,” Mr Prell said. “The 10 percent of properties we do take must have that special something that makes it Sotheby’s Concierge Auctions quality. Only then will one of our digital marketing and sales teams begin the process of preparing for the sale, always aligning with a local agent, working the database, understanding who the offering and the price point will appeal to, qualifying them for the bidding process, which requires a deposit to participate, and then watching the excitement unfold online.” Once on the Sotheby’s Concierge Auctions website, the sale of a property features a clock ticking and prices climbing. Sotheby’s Concierge Auctions has successfully auctioned off multiple properties in The Bahamas, while maintaining its commitment to working with Bahamian agents for each transaction.
PUERTO RICO SETS 7TH ELECTRIC RATE INCREASE IN JUST A YEAR SAN JUAN, Puerto Rico (AP) — Officials in Puerto Rico announced another electric rate increase Wednesday, the seventh in a year amid continuing power outages and the U.S. territory’s economic crisis. For a client that consumes 800 kilowatt hours, the new rate will be 33 cents per kwh, compared with the previous 29 cents. The average U.S. electric rate is 14 cents per kwh, according to the U.S. Energy Information Administration. The rate increase will go into effect Friday, angering many on the island of 3.2 million people who just deal with constant power outages blamed on crumbling infrastructure due to lack of maintenance. In April, a fire at a main power plant sparked an islandwide blackout. The increase comes as crews begin rebuilding Puerto Rico’s
power grid that Hurricane Maria razed in September 2017, leavig some customers without power for up to a year. The electric rate increases have occurred since Luma, a private company, took over transmission and distribution a year ago from Puerto Rico’s Electric Power Authority, which is burdened with $9 billion in debt and is trying to emerge from bankruptcy. Puerto Rico’s Energy Bureau said it would revise the electric rate by or before Oct. 1 amid concerns that the newest increase would spook potential investors already wary about the state of the island’s electric grid. Puerto Rico’s power plants depend on petroleum to generate about 97% of electricity, with renewables generating roughly 3%. The government has pledged to lessen its dependence on fossil fuels in upcoming years.
LITTLE RAGGED ISLAND, also known as St Andrew’s, is back on the market. It will be offered for sale to the highest bidder without reserve next month by Sotheby’s Concierge Auctions in conjunction with Bahamas Realty’s Stuart Halbert. The 712-acre island with two fresh water springs is the largest privately held island currently for sale in The Bahamas. PHOTO by Brett Davis for DPA.
“It’s busy,” he added. “We’re trying to get stabilised and get back to form. What I understand from our management team up there is that the challenge for everybody is housing, and if you can find it it is expensive. “Contractors have had to be creative and imaginative. Even government employees are in a trailer park at the government centre.” Abaco still enjoys the tax breaks and other
benefits conferred by its Special Economic Recovery Zone (SERZ) status, which lasts until end-November, and is designed to speed-up postDorian reconstruction by cutting the associated costs.” Mr Lleida added: “It’s helpful with the SERZ, but then I guess it is in the Government’s interest to get Abaco back up and running as quickly as possible to get that revenue stream back online.”
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Unions hold off on liveable wage push FROM PAGE B1 prices soaring, is “a daily topic” of discussion among workers, he said trade unions will let this to translate into demands for salary and benefit increases that the Bahamian economy is unable to bear. The commitment to introducing a livable wage is part of the thenopposition Progressive Liberal Party’s (PLP ) accord with the TUC and National Congress of Trade Unions of The Bahamas (NCTUB), which was struck prior to the September 2021 general election, and Mr Ferguson pledged his umbrella body - while prepared to moderate its ambitions on the implementation timeline - remains wedded to the concept. “The Government has bought into the concept of a living wage, which we in the TUC and the labour movement have already signed off on,” the TUC chief told this newspaper. “But certainly we have to take into consideration all of the economic factors.” Private sector representatives, including Peter Goudie, the Bahamas Chamber of Commerce and Employers Confederation’s (BCCEC) labour committee head, have argued that a “livable wage” first needs to be properly defined before any discussions are held on the issue. He also asserted that the sums recommended by the University of The Bahamas (UoB) study would be impossible for many businesses to afford, especially with the inflation-racked economy
so vulnerable. Mr Ferguson, though, defended the UoB research as providing a platform for future talks on the matter. “It was done by UoB. Certainly that is a guide which, in our view, we can now follow,” the TUC leader said. “It was done by academics, it was done by economists, and it was done by persons in the business of calculating numbers. “They came up with a figure for Nassau and Freeport and, certainly, we in the labour movement intend to use it as a guide for coming up with a living wage, not a minimum wage. It’s predicated on family of four and seeing what it takes for them to make a living wage. We will certainly be very active in having meaningful discussions about these issues.” The UoB study, dated September 30, 2020, and authored by Lesvie Archer, Olivia Saunders, Bridget Hogg, Vijaya Permual and Brittney Johnson, concluded that a living wage in New Providence and Grand Bahama is $2,625 and $3,550 per month respectively. “Our gross living wage estimate for New Providence is 26 percent lower than the Grand Bahama living wage estimate, nearly 200 percent higher than the national minimum wage, 127 percent higher than 2013 poverty line and nearly 75 percent higher than the minimum wage hike proposed by a local union,” they wrote. “Our living wage estimate for Grand Bahama is nearly 300 percent higher than the living wage, 200
percent higher than the 2013 poverty line and 140 percent higher than the minimum wage hike proposed by a local union.” The Bahamas’ private sector minimum wage, last increased following VAT’s introduction in 2015, is currently $210 a week, although the Davis administration is planning to now increase it again - likely to $250 per week at least. Mr Ferguson, though, indicated himself and the TUC are prepared to grant some slack on the timing of any livable wage implementation given the Bahamian economy’s post-COVID struggles and inflation’s impact on both businesses and consumers. “We’re not suggesting immediate implementation of a living wage because we have not yet determined what we consider to be reasonable having regard to employers,” he told Tribune Business. “We are going in with an open mind, and hope the three parties involved will be part of the discussion. We want to be sure of what we come up with, and that’s why it’s critically important for the employers to have a meaningful say in that process.” The Government would be the third party involved in such talks, but Mr Ferguson said organised labour will not unduly press for a livable wage - or any increase in salaries or benefits despite rampant inflation - given the Bahamian economy’s continued weakness. “I don’t think there is a trade union leader that is unaware of the state of the economy,” he told Tribune
Business. “That doesn’t mean they should not negotiate for better terms. The fundamental issue is to have regard for the state of the economy and, whatever you do, take into consideration the worker and overall society. “No one wants to kill the hen that lays the golden eggs. We want to keep the hen alive and in condition so that it lays eggs and other persons can benefit. We will not do anything that will be detrimental to The Bahamas. We’ll have some frank discussions but nothing that damages The Bahamas.
“Obviously the workers are concerned. They express their concerns regularly to is about the state of the economy in terms of inflation. “It’s a daily topic. It’s really and truly a daily topic. Gasoline is up at $7 per gallon, which is very high, and there’s been no increase in wages to offset that. “Food prices are high, and there has been no increase to offset that.” Mr Ferguson, though, said Bahamian trade union leaders must ensure their members’ demands are met only when the economy is
growing and can bear it. “We are not going to put The Bahamas in a state where it is detrimental to growth in our country. We are not going to do that,” he reiterated. “We are saying that where there are gains in the economy, we want workers to experience some of the gains. We want the economy to grow, the businesses to expand and the workers to benefit as a result of their contribution towards that. “A productive worker is good for the economy, good for the company and good for the country.”
MAKE GOV’T DEBT ‘BEST IN COUNTRY’ FROM PAGE B1 carried interest rates of 6 percent and 6.5 percent, respectively. The Sunshine Holdings and Arawak Homes chairman, meanwhile, hailed the Central Bank’s decision to continue providing public brokerage services “until further notice” as “the right public policy move” because it would have reduced market access to government securities at the very time The Bahamas needs to broaden the available investor pool to retail investors especially. Had the Central Bank exited as planned, government bonds and Treasury Bill investments would only have been available through private Bahamas-based broker dealers such as RF Bank & Trust and CFAL, which would have charged a fee for their services and thus made access more expensive. Confirming that this was the focus of his concerns, Sir Franklyn said of the Central Bank u-turn: “It’s, in my humble opinion, the right public policy move. It’s the right public policy move because we want to get more people involved in buying public sector debt securities. We have to make it as easy as possible. This is not the time to make it more difficult and expensive to get debt. I never understood why that made sense. “It was the right thing to do. The original cancellation was not prudent in prudent in my view. Timing had a lot to do with my view because it’s never the right time to do the wrong thing. It’s not just about when the economy has rebounded, but when the capital markets are a hell of a lot stronger. “There has to be more participation in the capital markets, and a lot of changes need to take place in them. There has to be a higher level of confidence in the capital markets. All these things need to happen first.” The Central Bank had previously unveiled a strategy to gradually exit its long-standing historical role as registrar and transfer agent for Bahamas Registered Stock (BRS) and Treasury Bills (TB), facilitating primary and secondary market access to these securities for investors. Asserting that this would “better align its activities with international good practices”, the Central Bank said it was to cease providing such services completely by New Year’s Day 2023. In a phased wind-down, it was to stop taking on new investors in government securities by March 1 this year. Access to government securities would
subsequently only be available through a BISX-registered broker-dealer, and all existing investors were to transfer their portfolios to the same broker/dealers by year-end 2023. However, after “considering market feedback”, the Central Bank said it had “decided to continue to accept applications for domestic government securities from new and existing individual investors until further notice”. It thus continues to facilitate the purchase and sale of government securities. The Central Bank’s reversal comes amid efforts to broaden and expand the pool of government securities investors given that traditional institutional buyers, such as the commercial banks, insurance companies and pension funds are up against their prudential and regulatory limits when it comes to the amount of debt they hold on their balance sheets. Sir Franklyn, meanwhile, said the Government’s debt needs to regain the status of being market leader. “My overall point is this must be part of a bigger picture where government debt is the best debt in the country,” he told Tribune Business. “What is happening today makes no sense, where the Government is paying 6 percent to 6.5 percent for debt while the banks are charging companies like Arawak Homes, who are looking for money, they’re prepared to lend at 5 percent or less. “That has got to change. That’s the fundamental reality. The Government’s debt in Bahamian dollars needs to be seen as the best debt in the country. That’s what’s got to happen. That’s how it always works. By definition of money, when I was in business school, it was the price the Government could pay,” Sir Franklyn continued. “If that is the definition of money, how could a price for the Government be less secure? It’s untenable. Whatever the explanation is for it, it has to change.” The answer, though, is not hard to locate with a national debt that is currently above $11.8bn and a projected $564m fiscal deficit for the upcoming 2022-2023 fiscal year. The Bahamian capital markets and investors, like their international counterparts, are attaching a greater risk premium to Bahamas government debt due to the impact of Hurricane Dorian and COVID19. This means the Government must pay more for its debt, especially since the creditworthiness downgrades by Moody’s and Standard & Poor’s (S&P) have forced Bahamian institutional investors to discount their existing holdings.
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THE TRIBUNE
Thursday, June 30, 2022, PAGE 5
OUTGOING CENTRAL BANK CHIEF WARNS ON ‘PROCEDURAL OVERKILL’ FROM PAGE B1
fully satisfied with our supervisory strategy for anti-money laundering and financial crime suppression. Our efforts in recent years have led to literally hundreds of improvements, but the fact that we found so many areas requiring improvement suggests that we and industry have more work to accomplish here,” he asserted. “In any event, the Central Bank’s anti-money laundering supervision has been recognised by leading external parties, including the FATF (Financial Action Task Force) and the IMF (International Monetary Fund), as meeting
the relevant international standards. “The Central Bank considers it essential that we not only meet but we demonstrably exceed these standards, but on a basis of sensible risk management. We have communicated repeatedly with industry that documentary and procedural overkill on low risk clients is a waste of time and money that would be better directed to larger and higher risk clients.” Calls for such a riskbased approach will be welcomed by Bahamian businesses and consumers who have frequently found themselves ensnared in red tape when it comes procedures such as opening a
HOTEL UNION AIMS TO CLOSE ‘FOUR OF FIVE’ THIS SUMMER FROM PAGE B1 It’s significant when you’re talking about paying in excess of $6 per gallon for gas. That’s unheard of in Nassau.” Vasco Bastian, an Esso dealer and vice-president of the Bahamas Petroleum Retailers Association, yesterday conceded that the wholesaler had decided to cut the $7.39 per gallon it was charging at all its stations to a level in line with rivals, Rubis and Shell, because it had seen DARRIN Woods a 50 percent sales slump through motorists switching to competitors who - at the time - were $1 cheaper. Meanwhile, Mr Woods added: “People are really trying to tighten their belts as best they can to cope with the high cost of inflation. When you look at it, everything around them is going up with the exception of their salaries and that’s definitely a concern for them. They can only do so much, and sometimes their salary comes out before they get home. “You have to put gas in your car to get to work and get paid. You are spending funds you have not yet earned. We have to find a solution. It is difficult having to tighten their belts and having to choose between this and that. They have to look at immediate needs as opposed to long-term, and spending between each point to get where they need to go without falling off or finding yourself in hard times.” Mr Woods said the hotel union was seeking to do its part by closing the outstanding industrial agreements on terms that will help, and be acceptable to, its membership. “We have five outstanding contracts we are trying to close now to bring some relief to our members,” he added. “Most of them would have been concluded if not for COVID. We’ve been locked down in various negotiations for the past three to four months. “We have three restaurants and then some smaller hotels. They are KFC, Graycliff and the Poop Deck. Those are the three. The others are two small hotels, Harborside and Best Western. All of those have been outstanding for quite a while. We’re trying to bring them to a conclusion. One of them is 95 percent or so complete, the others we have submitted the best recommendation we have. We’re back on track with those.” Mr Woods estimated that four of the five industrial agreements could be completed “by the end of summer”, especially for the restaurants and small hotels. He declined to identify which one was “95 percent complete”, or speak to the major one with the Bahamas Hotel Employers Association (BHEA) and its member properties, including Atlantis, because he had given an undertaking not to speak publicly until the talks finished.
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Notice is hereby given that in accordance with Section 138(4) of the International Business Companies Act. 2000, Avaggio Seas Inc. is in dissolution as of June 27, 2022 International Liquidator Services Ltd. situated at 3rd Floor Whitfield Tower, 4792 Coney Drive, Belize City, Belize is the Liquidator. LIQUIDATOR ______________________
bank account. Mr Littrell, meanwhile, said the costs associated with the worldwide approach to fighting money laundering may exceed any benefits that are gained. “It is now clear that in economic terms, the global anti-money laundering effort is not effective to demonstrably reduce predicate crime, or recover an appreciable share of dirty money and assets,” he said. “It is also clear that the costs of the international anti-money laundering effort are massive, and may well exceed the current benefits. “The untested assumption in the international anti-money laundering debate has been that most of the world’s anti-money laundering problems lie in small, less affluent countries. In fact, the vast majority of the world’s dirty money,
and the institutions servicing this dirty money, are associated with larger wealthy countries.” Mr Littrell said an annual anti-financial crime conference, which the Central Bank’s sponsors, had created “impetus to re-think” this approach. “The Central Bank from 2018 identified a particular problem in the international anti-money laundering community: Too many influential opinions were based upon unfounded and often wrong analysis, and too little upon empirical or fact-based analysis,” he added. “The Central Bank has also striven to become known for robust but simple approaches to bank regulation. Among other things, and after a long Dorian and COVID-based deferral, we intend to roll out the world’s simplest
fully Basel III compliant bank capital regime. “In 2021, the Central Bank and the Bank for International Settlements (BIS), which hosts the Basel Committee, coproduced an international conference on engagement between small states and the world’s rule-making bodies. We hope to continue as a prominent and positive representative of the interests of small states in international forums.” Looking ahead, Mr Littrell added: “It is important to remember, particularly for domestic institutions, that at some point we will face a catastrophic hurricane impacting directly upon New Providence. We have yet to demonstrate operational and financial resilience in the face of that challenge. More work lies in front of us.
“I also note for domestic institutions that the sooner the Sand Dollar digital currency is widely adopted, the sooner The Bahamas will be better insulated from catastrophes including hurricanes and pandemics.... The industry’s ability to absorb the shocks associated with Hurricane Dorian and a historic challenge in COVID demonstrates that Bahamian banks and associated institutions are generally in sound shape to face any reasonably foreseeable challenge. “It is worth noting that the Government’s fiscal response to both the above shocks materially eased the potential for shortterm losses. We urge the industry not to rely upon any assumption that public spending will always be available to make up for catastrophe and economic losses.”
PAGE 6, Thursday, June 30, 2022 FROM PAGE B1 better-than-expected trading result,” Mr Duff told this newspaper. “The absence of a major hurricane and claims costs being somewhat lighter across all lines of business created favourable conditions that we don’t normally see. “When your claims costs fall below expected levels you can only engage in conjecture as to why that should be, but it was very welcome for us and helped to contribute to this better than expected result. Across all major lines the claims costs fell below historical levels. We don’t know whether it’s a one-off and
THE TRIBUNE
‘No bang for the buck’: Insurer eases off motor we will see a return to more normal levels in 2022. So far, so good.” Mr Duff said it was vital that Bahamian general insurers generate profits in years when this nation escapes being struck by a major hurricane. The last storm to hit was Hurricane Dorian in 2019, and the ICB chief added: “It’s really important in years where you get a lucky break with no hurricane that you produce profits so as to strengthen your capital position against the next big blow.
“Whatever profits we make in the first six months of this year, we hope to create a little cushion against potential event losses in the second half. It will be the next three to four months that decide how well we do this year-end. We are keeping our fingers and toes crossed for the third successive year that The Bahamas might have a break and not see a significant catastrophic storm. “The numbers are doing OK so far. Our underwriting results are going a little better than expected. There’s nothing
For the quarter ending 31st March, 2022 Benchmark (Bahamas) Ltd. (“Benchmark”) recorded a Consolidated Net Profit/Loss of B$ (272,965.78) against a profit of B$1,547,473 for the same period 2021. Reduced revenue growth resulting from lower EquitiesTrading across our Trading Desks resulting from market uncertainty caused by the Russian/Ukraine war was the catalyst as Global Markets sold-off on the news. The market correction brought on lower price values for stocks which curbed the performance of our investment portfolio. Lower trading activity coupled with falling share price values made our quarterly comparatives difficult year over year. Benchmark Properties our real estate investment subsidiary continued to produce its stable constituent positive performance during the quarter which reduced the impact of lower trading activity and the stock market performance. For the quarter Net Consolidated Investment Income was negative B$ (717,572.26) against B$1,601,128. However, Net Realized Gain/Loss On investment for the period was B$58, 395.11. Operationally for the Quarter in-spite of The Russian, Ukraine war our Gross Profit was B$ 502,813.24. Notwithstanding market volatility and uncertainty, new business growth remained positive during the quarterly comparatively as Assets under administration grew three folds. This suggest a positive outlook for future trading activity across our trading desk for the balance of 2022, once markets stabilize and investors scepticism subsides. Benchmark’s subsidiaries contribution to the Consolidated Net Profit/Loss during the quarter; • Alliance Investment Management Ltd. Net Profit B$86,265.57 • Benchmark Advisors (Bahamas) Ltd. Net Loss B$(404,510.32 ) • Benchmark Properties (Bahamas) Ltd. Net Profit B$84,643.57 • Benchmark Ventures (Bahamas)Ltd. Net Profit B$47,428.97 Benchmark (Bahamas) Ltd. Consolidated Statement of Financial Position as at March 31st 2022 ASSETS Fixed Assets Intangible Assets Investment Properties Other Assets
297,996.72 476,695.50 6,282,346.98 -
Bank Brokers Due from Clients (Net) Other Recevables Invesment Securities Total Assests
31,632,748.12 1,341,904.79 4,277,700.04 3,756,898.86 48,066,291.01
Liabilities Overdraft Accounts payable Due to Clients Loans payable Total Liabilities
255,129.27 2,933,276.68 29,998,071.76 3,507,745.01 36,694,222.72
Equity
11,372,068.29
Benchmark (Bahamas) Ltd. Consolidated Statement of Comprehensive Income as at March 31st 2022 INCOME Income From Business Activities
2,568,032.87
Expenses Cost of Goods Sold General and Administrative Cost
1,158,223.70 923,592.80
Total Expenses
2,081,816.50
Realized Gain/Loss Unrealized Loss/Gain
58,395.11 ( 717,577.26)
NET INCOME/LOSS
(172,965.78)
that’s come out of the first five to six months of trading that gives us any concern.” Mr Duff added, though, that the Bahamian economy’s overall performance will also weigh heavily on how well ICB, which is the carrier through which BISX-listed J S Johnson places much of its general insurance business, does in 2022. “For every business and private citizen in The Bahamas, how the Government manages the economic challenges is going to be critical to all,” he said. “For insurance companies it is especially relevant because of the impact a depressed economy has on disposable income. “Our goal is to keep reminding consumers of the vital importance of maintaining insurance coverage. That is where our focus will be, and we are working hard on that and hoping the economy starts to recover and income filters down.” Bruce Fernie, ICB’s chairman, pointed to these challenges and the mixed
outlook for the Bahamian economy in ICB’s recentlyreleased 2021 annual report. “Clearly, some painful economic decisions will have to be made and non-essential public expenditure will likely be curtailed,” he warned. “The COVID-19 pandemic has taken its toll on the private sector with many private businesses being forced to close with the resultant loss of jobs. Against this backdrop, disposable income for many private and corporate citizens will be squeezed in the short to medium-term. “On a more positive note, however, overseas investment in The Bahamas appears to be on the increase and there are numerous new building projects underway. Also, a number of Bahamian realtors are reporting substantially increased demand from overseas for Bahamian land and high-end properties.” Mr Fernie, noting that ICB’s 2021 profits represent a 10.79 percent return on shareholder equity, echoed Mr Duff in saying: “Given the volatility
of trading results for general insurers due to the unpredictability of losses from major hurricanes, it is vital that insurers are able to post healthy profits in years when we are spared major weather event losses. “With the impact of the devastating Hurricane Dorian still fresh in our minds, it was a relief that The Bahamas avoided a hurricane loss for the second consecutive year. Aside from the absence of any hurricane losses, the company’s bottom line profit was enhanced by ordinary claims costs being substantially lighter than normal. “In terms of premium volume, it was pleasing that the company grew its gross written premium during the year by 10.72 percent (excluding premium from fronted policies). This was in line with expectations but was nevertheless a welcome outcome given the depressed economy and the COVID-19 safety protocols the industry was required to work under during the year.”
THE TRIBUNE
Thursday, June 30, 2022, PAGE 7
Powell: ‘No guarantee’ Fed can tame inflation, spare jobs By PAUL WISEMAN AP Economics Writer
WASHINGTON (AP) — Federal Reserve Chair Jerome Powell said there’s “no guarantee’’ the central bank can tame runaway inflation without hurting the job market. Speaking Wednesday at a European Central Bank forum in Sintra, Portugal, Powell repeated his hope that the Fed can achieve a so-called soft landing — raising interest rates just enough to slow the economy and rein in surging consumer prices without causing a recession and sharply raising the unemployment rate. “We believe we can do that. That is our aim,’’ he said. But the Russian invasion of Ukraine, he said, had made the job more difficult by disrupting commerce and driving up the price of food, energy and chemicals. “It’s gotten harder,’’ Powell said. “The pathways have gotten narrower.’’ ECB President Christine Lagarde echoed the “major impact” of energy shocks, which are rippling worldwide but felt
FEDERAL Reserve Chairman Jerome Powell testifies before the House Financial Services Committee on Thursday, June 23, 2022 in Washington. (AP Photo/Kevin Wolf)
acutely in Europe because of its reliance on Russian oil and natural gas. She also pointed to Europe’s proximity to the war in Ukraine and said how “energy was vastly underestimated” in the bank’s assessment of inflation. The ECB and the
Fed were slow to recognize the inflation threat that emerged just over a year ago. They believed that rising prices were the temporary result of supply chain snags as the economy bounced back with unexpected speed from 2020’s brief but
devastating coronavirus recession. But inflation kept accelerating. The Fed raised its short-term benchmark rate in March and May and appeared to be ready for another half-percentage-point increase at its
meeting June 14-15. Then, the Labor Department reported that consumer prices had shot up 8.6% in May from a year earlier — biggest jump since 1981. The Fed responded by pushing the rate up by three-quarters of a percentage point
— biggest hike since 1994. Europe’s central bank is behind the Fed but said it will raise rates in July for the first time in 11 years and again in September to target inflation running at a record 8.1% in the 19 countries using the euro. In a speech Tuesday opening the ECB forum, Lagarde said the bank will go gradually with hikes but keep its options open to “stamp out” inflation if it surges faster than expected. Increasingly, economists worry that higher rates could push the economy into a recession. Powell, however, pointed to a strong labor market — unemployment is near a half century low at 3.6% — and noted that most households and businesses had healthy savings. “Overall,’’ he said, “the U.S. economy is well-positioned to withstand tighter monetary policy.’’ Lagarde noted similar was true of Europe.
GONET BANK & TRUST LIMITED Consolidated Statement of Financial Position KPMG PO Box N-123 Montague Sterling Centre 13 East Bay Street Nassau, Bahamas
As at December 31, 2021, with corresponding figures for 2020 (Expressed in United States dollars) Notes
2021 $
2020 $
3, 5, 11 3, 11 3, 6, 11 7 3, 8, 11
99,655,965 17,418,752 354,499 661,082 1,157,109
126,028,048 18,584,928 498,014 1,517,195 1,692,191
119,247,407
148,320,376
1,084,797 96,554,862 340,315 522,484 5,766,350
1,316,805 120,433,917 482,795 1,248,778 6,899,181
104,268,808
130,381,476
EQUITY Share capital Authorised, issued and fully paid: 1,000,000 shares of $1.00 each Retained earnings
1,000,000 13,978,599
1,000,000 16,938,900
Total equity
14,978,599
17,938,900
119,247,407
148,320,376
INDEPENDENT AUDITOR’S REPORT To the Shareholders of Gonet Bank & Trust Limited Report on the Audit of the Consolidated Financial Statements Opinion We have audited the consolidated financial statements of Gonet Bank & Trust Limited and its subsidiary (“the Group”), which comprise the consolidated statement of financial position as at December 31, 2021, the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including significant accounting policies and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2021, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (“IFRS”). Basis for Opinion We conducted our audit in accordance with International Standards on Auditing (“ISAs”). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the International Ethics Standards Board for Accountants International Code of Ethics for Professional Accountants (including International Independence Standards) (“IESBA Code”), and we have fulfilled our ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Other matter The consolidated financial statements of Gonet Bank & Trust Limited as at and for the year ended December 31, 2020 were audited by another auditor who expressed an unqualified opinion on those consolidated financial statements in their report dated April 16, 2021. Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process. KPMG, a Bahamian partnership and a member firm of the KPMG global organization of independent Phone: +1 242 393 2007 member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
Fax:
+1 242 393 1772
www.kpmg.com.bs Auditor’s Responsibilities for the Audit of the Consolidated FinancialInternet: Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, then we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
June 28, 2022 KPMG, a Bahamian partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee.
Page 2
ASSETS Due from banks Loans and advances to customers Derivative financial instruments Property and equipment Prepayments and other assets Total assets LIABILITIES Due to banks Deposits from customers – demand Derivative financial instruments Lease liabilities Accrued expenses and other liabilities
3, 11 3, 11 3, 6, 11 9 3, 10, 11
Total liabilities
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements. These consolidated financial statements were approved on behalf of the Board of Directors on June 28, 2022 by the following:
GONET BANK & TRUST LIMITED Note to the Consolidated Financial Statement Year ended December 31, 2021 (Expressed in United States dollars)
3
1. General The accompanying consolidated statement of financial position is an abridged extract from Gonet Bank & Trust Limited’s (“the Bank”) consolidated financial statements. The independent auditor’s report included herewith should be read in conjunction with the full set of consolidated financial statements, which can be obtained at, or inspected at the Bank’s office at Offices at Old Fort Bay, No.8 Pineapple House, Western Rd., P.O. Box SP 61302, Nassau, Bahamas.
PAGE 10, Thursday, June 30, 2022
THE TRIBUNE
MERGER VOTE AT SPIRIT AIRLINES COULD RESHAPE DISCOUNT AIRLINE MARKET By DAVID KOENIG AP Airlines Writer
DALLAS (AP) — The prospect of a takeover of Spirit Airlines threatens to upend the cheap-fare end of the industry much like a series of mergers among big airlines reduced choices for travelers. Spirit is the largest budget airline in the United States, but its days as a stand-alone company appear numbered. The big question is whether it is sold to fellow discounter Frontier Airlines or to JetBlue, which operates more like the four giants that dominate the U.S. airline business. Late Wednesday, Spirit
delayed a shareholder vote on a merger with Frontier from Thursday until July 8. Spirit said it would use the extra time to continue talking with Frontier and JetBlue Airways about their rival bids for Spirit. The outcome could determine how many choices travelers have for the lowest fares. That’s particularly important to leisure customers, the group that Spirit targets. Spirit shareholders are looking at a stock-and-cash offer from Frontier that is currently worth about $22 per share, or $2.4 billion, and would give Spirit shareholders
48.5% of the combined airline. Spirit’s board has continued to support the deal in the face of a hostile bid from JetBlue worth $33.50 per share, or $3.6 billion. JetBlue says its all-cash offer is financially superior. Frontier argues that its proposal will be better for Spirit shareholders in the long run, assuming that airline stocks recover to pre-pandemic levels. Both covet Spirit because of its relatively young fleet of more than 170 planes and its roughly 3,000 pilots — even more valuable during a pilot shortage that could last most of this decade.
Antitrust regulators are sure to examine either deal closely. Frontier and JetBlue both claim that consumers will benefit if they win the Spirit sweepstakes. A Frontier-Spirit combination would operate about 5% of the nation’s flights, and JetBlue plus Spirit would operate more than 7%, based on July schedules, making either
one a stronger competitor to American, United, Delta and Southwest. People who follow the industry closely are divided over which deal would help consumers more. Those who prefer a Frontier-Spirit deal point out that both are “ultra low-cost carriers” that charge rock-bottom fares — although they add many fees. They say JetBlue has become too much like the bigger airlines. “You end up either with another big, high-cost, regular-fare airline (with JetBlue), or you end up with a truly nationwide ultra-low-costcarrier that’s twice the size of anything today,” says Robert Mann, a longtime airline executive and consultant. Consumers, he said, “should be looking for continuation of a true low-fare, austere environment with the SpiritFrontier combination.” Scott Keyes, the founder of Scott’s Cheap Flights travel site, doesn’t like either deal, “but I like the JetBlue option even less.” Keyes said removing a competitor always tends to push up fares, but the impact won’t be as bad if the buyer is another budget airline like Frontier. “Even if you never fly Spirit or Frontier, you still owe them a debt of gratitude for causing your Delta or American flight to be cheaper than it would be otherwise,” he said. Spooked by the growth of the discount airlines, bigger carriers started to sell “Basic Economy” fares in recent years, although they limit the number of bargain-bin seats on each flight. JetBlue CEO Robin Hayes counters with a decade-old study by MIT researchers who found that JetBlue flying a particular route did more to reduce prices than did service by budget airlines, which account for a small portion of the market. He has taken to calling it “the JetBlue effect.” Michael Linenberg, an airline analyst for Deutsche Bank, said if JetBlue succeeds in buying Spirit, some of the cheapest fares might go away, but a bigger JetBlue could replace them with seats that appeal to other kinds of travelers. He pointed to JetBlue’s “Mint” business-class service, which has been so successful on transcontinental flights that it forced bigger rivals to cut prices on their premium seats. “It’s not all about catering to people who want to pay
$29 or $59 fares. There are passenger segments that JetBlue will serve that Frontier and Spirit do not,” Linenberg said. “There are going to be lots of seats out there, and it’s not like JetBlue will stop offering low fares.” Savanthi Syth, an airline analyst for Raymond James & Associates, said any loss of cheap seats after a JetBlueSpirit deal will be temporary because other budget carriers — notably including Frontier — will grow. “Frontier has the order book (for new planes) to step in and pick up what Spirit leaves behind,” she said. It’s even harder to predict whether a Spirit sale will make much difference in customer service. Spirit had the highest rate of consumer complaints to the government in the latest figures from the Transportation Department, covering April, and has finished at the bottom five of the last seven years. Neither would-be buyer seems likely to improve Spirit’s poor record. Frontier had the worst complaint rate the other two years, and JetBlue’s rate last year was higher than everyone except Spirit and Frontier. Several mergers between 2008 and 2013 — Delta bought Northwest, United absorbed Continental, Southwest bought rival lowcost carrier AirTran, and American and US Airways combined — left four airlines in control of 80% of the U.S. market and ushered in several years of airfares rising faster than inflation. The pace of consolidation then slowed, with only one major deal, Alaska Airlines’ 2016 acquisition of Virgin America. Airline industry officials believe that that antitrust regulators would prevent American, United, Delta or Southwest from snapping up any rivals, but that doesn’t rule out further consolidation. Some analysts say a merger of JetBlue on the East Coast and Alaska in the West would make sense. Smaller players Allegiant Air, Sun Country and startups Avelo and Breeze could become takeover targets at some point. “In the ultra-low-cost space, we probably have too many players. “I think we will see consolidation,” said Linenberg, the Deutsche Bank analyst. “Do we need eight or nine or 10 airlines flying from New York to Fort Lauderdale?”
THE TRIBUNE
Thursday, June 30, 2022, PAGE 11
US newspapers continuing to die at rate of two each week By DAVID BAUDER AP Media Writer NEW YORK (AP) — Despite a growing recognition of the problem, the United States continues to see newspapers die at the rate of two per week, according to a report issued Wednesday on the state of local news. Areas of the country that find themselves without a reliable source of local news tend to be poorer, older and less educated than those covered well, Northwestern University’s Medill School of Journalism, Media and Integrated Marketing Communications said. The country had 6,377 newspapers at the end of May, down from 8,891 in 2005, the report said. While the pandemic didn’t quite cause the reckoning that some in the industry feared, 360 newspapers have shut down since the end of 2019, all but 24 of them weeklies
serving small communities. An estimated 75,000 journalists worked in newspapers in 2006, and now that’s down to 31,000, Northwestern said. Annual newspaper revenue slipped from $50 billion to $21 billion in the same period. Even though philanthropists and politicians have been paying more attention to the issue, the factors that drove the collapse of the industry’s advertising model haven’t changed. Encouraging growth in the digital-only news sector in recent years hasn’t been enough to compensate for the overall trends, said Penelope Muse Abernathy, visiting professor at Medill and the report’s principal author. Many of the digital-only sites are focused on single issues and are clustered in or close to big cities near the philanthropic money that provides much of their funding, the report said. News “deserts” are
PUBLIC NOTICE
INTENT TO CHANGE NAME BY DEED POLL The Public is hereby advised that I, Danna Morin of George Town, Exuma, Bahamas, the parent of KIMBERLY ANASTACIA LAURENVIL intend to change my child name to KIMBERLY ANASTACIA MORIN. If there are any objections to this change of name by Deed Poll, you may write such objections to the Chief Passport Officer, P.O. Box N-742, Nassau, New Providence, Bahamas no later than thirty (30) days after the date of publication of this notice.
PUBLIC NOTICE
INTENT TO CHANGE NAME BY DEED POLL The Public is hereby advised that I, ASHLEY STEVEVANO GARDINER of Founder’s Way, Murphy Town, Abaco, intend to change my name to ASHLEY STEVANNAH GARDINER. If there are any objections to this change of name by Deed Poll, you may write such objections to the Deputy Chief Passport Officer, P.O. Box N-742, Nassau, Bahamas no later than thirty (30) days after the date of publication of this notice.
NOTICE
NOTICE is hereby given that KEVIN PIERRE of Panza Corner, New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 30th day of June, 2022 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
NOTICE
NOTICE is hereby given that PEDRO JOSE MARTINEZ VASQUEZ of P. O. Box SS-5612, Nassau Village, New Providence, Bahamas is applying to the Minister responsible for Nationality and Citizenship, for Registration Naturalization as a citizen of The Bahamas, and that any person who knows any reason why registration/ naturalization should not be granted, should send a written and signed statement of the facts within twenty-eight days from the 23rd day of June, 2022 to the Minister responsible for nationality and Citizenship, P.O. Box N-7147, Nassau, New Providence, The Bahamas.
Legal Notice NOTICE INTERNATIONAL BUSINESS COMPANIES ACT, 2000
Mykonos Investment Fund Ltd. (IN VOLUNTARY LIQUIDATION)
NOTICE IS HEREBY GIVEN that in accordance with section 138(6) of the International Business Companies Act, 2000, as amended, the winding up and dissolution of Mykonos Investment Fund Ltd. is complete. L. Michael Dean Sole Liquidator Address: Equity Trust House Caves Village West Bay Street P. O. Box N-10697 Nassau, Bahamas
growing: The report estimated that some 70 million Americans live in a county with either no local news organization or only one. “What’s really at stake in that is our own democracy, as well as our social and societal cohesion,” Abernathy said. True “daily” newspapers that are printed and distributed seven days a week are
also dwindling; The report said 40 of the largest 100 newspapers in the country publish only- digital versions at least once a week. Inflation is likely to hasten a switch away from printed editions, said Tim Franklin, director of the Medill Local News Initiative. Much of the industry churn is driven by the growth in newspaper
chains, including new regional chains that have bought hundreds of newspapers in small or mid-sized markets, the report said. Less than a third of the country’s 5,147 weekly newspapers and a dozen of 150 city and regional daily papers are now locallyowned and operated, Medill said. Abernathy’s report
pointed to a handful of “local heroes” to counter the pessimism that the raw numbers provide. One is Sharon Burton, publisher and editor of the Adair County Community Voice in Kentucky, where she pushes her staff toward aggressive journalism while also successfully lobbying to expand postal subsidies for rural newspapers.
PAGE 12, Thursday, June 30, 2022
THE TRIBUNE
Biden administration holding its first onshore oil sales By MATTHEW BROWN Associated Press
BILLINGS, Mont. (AP) — The U.S. government this week is holding its first onshore oil and natural gas drilling lease auctions since President Joe Biden took office after a federal court blocked the administration’s attempt to suspend such sales because of climate change worries. The online auctions start Wednesday and conclude Thursday. About 200 square miles (518 square kilometres) of federal lands were offered for lease in eight western states. Most of the parcels are in Wyoming. The sales come as federal officials try to balance efforts to fight climate change against pressure to bring down high gas prices. Republicans want Biden to expand U.S. crude production. He faces calls from within his own party to do more to curb fossil fuel emissions that are heating the planet. Oil production increased in the U.S. in recent months, but it’s still well
A FLARE to burn methane from oil production is seen on a well pad near Watford City, N.D., last year. The U.S. government this week is holding its first onshore oil and gas sales from public lands since President Joe Biden took office. (AP Photo/Matthew Brown, File) below pre-pandemic levels. Companies have been hesitant to expand too quickly because of uncertainty over how long high prices will continue. A coalition of 10 environmental groups said in a lawsuit filed before the sales even began that they
were illegal because officials acknowledged the climate change impacts but proceeded anyway. An immediate ruling was not expected. Interior Department spokesperson Melissa Schwartz said the agency did not have comment on the litigation.
Beginning with this week’s sales the royalty rate for oil produced from new federal leases is increasing to 18.75% from 12.5%. That’s a 50% jump and marks the first increase since the 1920s. Parcels also are being offered in Colorado, Utah,
New Mexico, Montana, Nevada, North Dakota and Oklahoma. Hundreds of parcels of public land that companies nominated for leasing had been previously dropped by the administration because of concerns over wildlife being harmed by drilling rigs. More parcels covering about 19 square miles (49 square kilometres) were dropped at the last minute in Wyoming because of potential impacts on wilderness, officials said. But attorney Melissa Hornbein with the Western Environmental Law Center said the reductions in the size of the sales were not enough. “They are hoping that by choosing to hold sales on a smaller amount of acreage they are threading the needle. “But from our perspective, the climate science is the one thing that doesn’t lie,” Hornbein said. Oil industry representative Kathleen Sgamma said the environmentalists’ lawsuit ignores the fact that
lease sales from U.S. lands are required under federal law. “Public lands are managed in a balanced manner. Balance is a word these groups don’t understand,” said Sgamma, president of the Denver-based Western Energy Alliance, which represents oil and gas companies. Fossil fuels extracted from public lands account for about 20% of energyrelated U.S. greenhouse gas emissions, making them a prime target for climate activists who want to shut down leasing. Biden suspended new leasing just a week after taking office in January 2021. A federal judge in Louisiana ordered the sales to resume, saying Interior officials had offered no “rational explanation” for canceling them and only Congress could do so. The government held an offshore lease auction in the Gulf of Mexico in November, although a court later blocked that sale before the leases were issued.