As the news circulated that 88 Seaborne Airlines employees could lose their jobs because the company was pulling its corporate headquarters out of St. Croix to move to San Juan, Puerto Rico, Seaborne President and Chief Executive Officer Gary Foss said that it was meeting the Government Employees Retirement System’s demand to pay back by the end of Thursday the loan GERS made to Seaborne.
Foss said the airline wired on Thursday “in excess of $4 million” to GERS to settle its loan obligations. GERS put the amount owed at $4.3 million. Foss later phoned to say he wasn’t sure of the exact amount repaid since Seaborne was disputing “a few hundred thousand” in consulting fees.
Additionally he said that since earlier this year, Seaborne and GERS have been involved in negotiating a restructuring of a 2009/2012 loan agreement as part of broader discussions with the territorial government.
Foss said in the press release that those talks broke down last week and Seaborne promptly requested a payoff amount.
With the payment, the return on investment to GERS is more than 30 percent during the loan period, in keeping with their fiduciary obligations to their shareholders.
In 2009, GERS loaned Seaborne Airlines $3.3 million, with $1.3 million in the form of an ordinary loan and $2 million in a convertible loan; GERS had the option of converting the loan to a 40 percent ownership stake in the company. The loan had a five-year term.
It’s still too early to tell if the 88 Seaborne administrative employees who could be out of a job will relocate when Seaborne completes moving its corporate headquarters by March 22, Seaborne’s director of business development, Mike Ritzi, said Thursday.
Ritzi said that all 88 were offered jobs in San Juan and added that Seaborne will comply with the territory’s laws regarding severance for those who won’t make the move.
Ritzi stressed that Seaborne will continue to operate service from both Christiansted Seaplane Terminal and Henry E. Rohlsen Airport.
Foss later said that Seaborne will continue to provide sponsorship tickets to the territory’s organizations to use in fundraising. He said that last year, the airline provided 1,300 tickets to 290 organizations.
Ritzi said it makes administrative sense for Seaborne to make San Juan its corporate headquarters since it is the main hub for the airline. He also said the Puerto Rico government offered incentives.
In the Wednesday press release announcing the move to San Juan, Seaborne Puerto Rico will take an equity position in the airline and have two seats on the board of directors of the parent company of Seaborne, Coastal International Airways.
“Puerto Rico is rolling out the red carpet,” Foss said.
Seaborne said Wednesday it will create 400 jobs in Puerto Rico. A total of 150 of the 400 positions will be added in Puerto Rico in the first quarter of 2014. This will bring total Seaborne employment in Puerto Rico to 250 people.
Ritzi said 12,000 passengers a day move through San Juan airport, with many of them connecting to Caribbean destinations.
Seaborne has spent the past year taking up the slack left when American Eagle pulled out of the Caribbean in April.
“Those were mature markets,” Foss said.
Ritzi said the Seaborne expanded or has announced expansion to 10 new markets since December 2012.
“And we have more to announce coming up,” he said.
According to Ritzi, Seaborne is rebranding itself to bring things like its logo and uniforms more in line with national carriers American and JetBlue. Seaborne has interline agreements with those airlines, and Wednesday said it would soon start code sharing with Delta Airlines.