As LIAT, the island-hopping regional air carrier, continues to try to remain in the sky amidst economic turbulance, its shareholder government leaders have been meeting in Barbados to be apprised of, and discuss the board’s recovery programme – both long-term and short-term.
After the meeting at Hilton Barbados Resort yesterday, the man who chairs the shareholder committee that also comprises Heads of Government from Barbados, Antigua & Barbuda and Dominica, Prime Minister Dr Ralph Gonsalves of St Vincent & the Grenadines, told reporters the leaders had heard submissions from board of directors chairman Dr Jean Holder and acting chief executive officer Julie Reifer-Jones.
Flanked by Prime Ministers Freundel Stuart of Barbados and Baldwin Spencer of Antigua & Barbuda, along with Dominca’s financial secretary, Gonsalves said the two presentations dealt with continuing efforts to fix LIAT, “because we have challenges, we have limitations, but we have possibilities”.
“We have had some setbacks, but we have had accomplishments and we are going forward. We received reports on the fleet modernization, our financial position, the plan for the sustainable recovery, including an immediate recovery plan, plus a number of other auxiliary issues like hanger facilities and the important question of CLICO pension fund,” Gonsalves pointed out.
In seeking to provide details of the state of the airline, chairman Holder said the shareholders having not met since May last year, the airline had experienced some challenges which included the company’s fleet replacement programme, while maintaining 100 flights per day.
“It has been a very difficult operation. We have had some set backs because of the challenges we faced during that particular period. I am happy to say that the predictions that we also would have had major meltdowns during the Christmas season, did not happen because of the wise planning by the airline during that period of time,” he declared.
“We’ve been looking at a recovery plan for the airline since that period, and Madam Julie Reifer-Jones, who took over as acting CEO during a very difficult period for the airline, has been soldiering on and doing a good job to help us to recover from the challenges we face,” he observed.
“I think what we’ve been looking at today is a number of structural changes and improvements, which we think are required at LIAT.”
Holder reasoned that the airline, which is now 58 years old, has survived with the help of its shareholder governments, when other “giants” have come and gone. He suggested that one of LIAT’s most significant problems was trying to balance its revenue and expenditure.
The chairman said the company faced the issue of cutting costs and growing revenues, hopefully with minimum pain for employees.
“We have had, and will have to take a very hard look at our current schedules and the profitability of our current routes. We have brought in some experts to assist us in looking more deeply into the route analysis issues; but it is clear that LIAT cannot continue to provide essential social services to 21 countries in the Caribbean on a daily basis, offering close to a thousand flights every week, and only four countries put any funds into this operation,” contended Holder.
He told the news conference that the company had a 100-day programme within which to fix “a number of things”.
On intervention, shareholders committee chair, Gonsalves said that for the past seven years, they had told the board of directors and management, to run LIAT commercially, which he said meant, cutting out social, or unprofitable routes, not necessarily destinations.
He said they recognised that frequency of flights and large number of scattered short-haul routes did not allow the carrier to provide a fair financial return on shareholders’ investments.
Despite this, Gonsalves suggested, the airline must still be operated with some element social services.
“But still you must make sure it is run commercially,” he added.
He pointed out that in 2007-2008, LIAT borrowed money from the Caribbean Development Bank for restructuring and recently got another loan of US$65 million for fleet replacement.
“We said this refleeting will cost just over $100 million; $65 million will be by way of loan to LIAT, with the guarantee from the shareholder governments. That has happened, and we expected other governments to come on board, in addition to the three major shareholders. One other government came aboard, that is the Commonwealth of Dominica,” noted the Vincentian prime minister.
“So that we have had,” Gonsalves continued, “to bear the burden of capitalizing the difference between what we borrowed from the CDB and what the refleeting would cost.
“Part of the difficulty was what, we the shareholder governments had pledged to put in, which is to say, this difference; we have put in 77 per cent of that. So we have about US$6.3 million short, which would be dealt with during the course of this year.”