By SAM SMITH, Guardian Staff Reporter

samsmith@nasguard.com

Bahamasair will fly even deeper into the red after the Privy Council, the London-based court of final appeal, held the nation's flagship carrier liable in a nine-year-old lawsuit.

The cash-strapped carrier has endured years of red ink, booking losses of nearly $10 million for the 2006/2007 fiscal year and has sapped the Treasury of funds in perennial bail-outs. As of yesterday, there was no official estimate of what the court loss will cost.

The ruling on the suit, originally brought by ground-support provider Cleare Air Aviation Services Ltd., found the government-owned carrier in breach of a government-drafted contract with CAASL and ordered Bahamasair to pay for construction costs of new offices because, as the ruling stated, Bahamasair refused to vacate until CAASL provided a new location.

Cleare Air had previously estimated the office construction costs at $324,000, and the ruling indicated this figure is not in dispute.

The London court also ordered Bahamasair to pay uncollected rent on the offices and a nearby hangar – plus 10 per cent interest – dating back to January 1997, but the Privy Council did not fix a value to the back rent. Both parties must submit compensation proposals to London within 21 days.

Massai Aviation Services Limited and Aerostar Limited, both companies that arose from share shuffling of CAASL during early attempts to move the airport's staff into a privately owned monopoly, also sought a "much larger sum," on the grounds that the "business had virtually collapsed" because of Bahamasair's misconduct, according to the ruling.

The Privy Council denied this third claim after learning that Aerostar had sold all its shares of CAASL to Executive Flight Services Limited, another ground-support provider, for $1.2 million.

"The business had not collapsed and much of it had indeed been sold, albeit for less than CAASL may have thought it worth. There may well have been a claim for loss of profits caused by the delay but this has never been precisely particularized or proved, nor did the plaintiff seek an order for damages to be assessed. It is far too late to do that now," the ruling from Baroness Hale of Richmond read.

"The whole purpose of the transaction was the comprehensive redevelopment of the site so as to provide an FBO (fixed-base operation) facility, including a terminal building, and for that the Lessee required access to the whole site," the ruling read regarding the government's purpose in leasing CAASL the space at Sir Lynden Pindling International.

According to the ruling, Bahamasair got in the way.