CPA employees face pay cut

Employees at the Commonwealth Ports Authority are facing a 10-percent salary cut as the agency strives to reduce costs to meet its debt requirements.

Beginning June 22, 2008, CPA personnel will work 72 hours every two-week period, acting executive director Lee Cabrera said in a memorandum.

The ports authority has also suspended all hiring, overtime payment, pay hikes, promotions, and any reclassification that will mean additional costs to CPA.

In addition, the agency has banned off-island travel, except for trips fully paid for by the Federal Aviation Administration. CPA is also keeping a tighter rein on inter-island trips; they will be approved on a case-by-case basis by the acting executive director and the acting comptroller.

CPA hopes to reduce operating expenses by 10 percent.

“It is very difficult for me to impose more restrictions on our expenditures and also expect you to deliver a high level of service to the public. However, it is very critical that we immediately take action in order that we meet our financial obligations,” Cabrera told the employees.

The cost-cutting measures were implemented in the wake of CPA’s failure to meet the revenue level required by its 1998 indenture on its airport revenue bonds. The bond agreement requires CPA to make timely payments. It also requires CPA to maintain a 1.25 revenue-to-bond payment ratio at all times in the duration of the bond. This means for every $1 owed on the bond, CPA must have $1.25 of net revenue in reserve.

CPA, which still owes $17 million, has been making punctual payments but has failed to meet the required debt ratio of 1.25.

To generate more revenue, CPA has already terminated its airline incentive program and increased airport rates.

Currently, some airlines get 50 percent discount on airport charges for opening new routes to the Northern Marianas. The program will be repealed effective June 13, 2008.

Airport rates will also increase on the same day.

For airlines that have a formal agreement with CPA, the landing fee will go up from $1.40 to $2.02 per 1,000 pounds, and the enplanement fee will increase from $8 to $9.07 per person. For use of the incinerator, “signatory” airlines will pay an additional 61 cents per pound—from 55 cents to $1.16.

For “non-signatory” airlines, the landing fee will increase from $2.10 to $3.03 per 1,000 pounds, and enplanement fee from $12 to $18 per person. The incinerator fee will go up from 82 cents to $1.74 per pound.