News & Media

PJIAE launches second cost-reduction program to guarantee business continuity

SXM Airport

As airlines have dramatically reduced flights to SXM due to the current pandemic, PJIAE Management is preparing its second cost reduction program in order to survive the COVID-19 crisis and guarantee its operations and business continuity.

While recovering from the financial and infrastructural damages of Hurricane Irma in 2017, PJIAE is faced with an even larger challenge. Due to the global pandemic, the Airport closed its doors on March 23, 2020 and reopened in August 2020 for international traffic, which resulted in a loss of more than ANG 20 Million. During the hibernation period, PJIAE Management introduced a first wave of cost reduction measures, which included staff benefit reductions and other cost reductions, such as reductions of all service level agreements. These reductions were necessary to guarantee PJIAE’s operations for 2020, but with the current inbound numbers of around 10% in comparison to 2019, additional cost reduction measures will need to be implemented to guarantee operations for 2021.

“The main objective of the cost reduction program is to preserve as much cash as needed to guarantee airport services for our tourists and our island. In August and September, we saw traffic numbers increasing but not as much as we hoped. The slow virus containment and the uncertainty about the resurgence and spread of the virus in the US and developing economies, are causing prolonged travel restrictions, which impacts consumer travel confidence. Over the last months, our Commercial and Financial team analyzed the global situation and based on the predictions they created a Needed Base Case scenario and Worst-Case Forecast scenario for the coming 4 years. These two scenarios are part of PJIAE’s Rebuild and Recovery Strategy, which identifies several commercial initiatives, includes postponement of several capital projects to preserve cash, and outlines how much cash is needed to guarantee operations and business continuity,” said CEO – Brian Mingo.

The most important growth drivers for PJIAE, along with the island recovery, are contingent on restarting flight routes, ease of travel restrictions to Sint Maarten, and offering PCR test services at the airport (due to limited availability of PCR tests in the USA and other countries.) Furthermore, COVID-19 outbreak prevention and control mitigations, uniform island wide Safety & Hygiene Protocols, and of course an open border to the French side are all essential for recovery of arrival numbers. The latter are also important for the overall socioeconomic recovery of Sint Maarten.

‘Given the global travel ban impact that C19 has caused for PJIAE -an airport with very little revenues-, Cost Management is crucial to preserve cash and survive. Cost Management is like physical exercise to build and maintain health and resilience. The price for inactivity is very costly and can be too high. From a financial perspective, we need to be prepared for the worst-case scenario because it is very hard to provide a realistic assessment of the financial impact of Covid-19 and its course. Therefore, the Management Team will further reduce the company costs and continue assessing and adjusting the operating costs as well as the level of investments on an ongoing basis,” said CFO - Leo van Der Meiden.