One route

Shareholders all focused on restructuring plan

A proposal that Barbados set up its own airline with 10 planes and up to 350 permanent staff to replace cash-strapped LIAT is being dismissed as a distraction by chairman of the Antigua-based carrier Dr Jean Holder.

The document which reportedly originated from the Antigua-headquartered LIAT, a copy of which Barbados TODAY obtained, pushes for the establishment of a Barbadian carrier unencumbered by LIAT’s financial and other baggage as a “fresh start” as opposed to waiting for the “slow, painful and costly collapse” of the island hopper – the only two options the proposal envisions.

“As one of the major economic and tourism centres of the Eastern Caribbean, there is a strong case for Barbados to possess its own airline in order to serve existing markets, and develop new ones that meet the specific trade, investment, and tourism needs of the country,” the document states.

It proposes a Barbados Air Carrier (Newco) be established with its own Air Operator’s Certificate (AOC) and route licensing authorization, effectively replacing the majority of existing LIAT services throughout the region and seeking to develop new markets.

Antigua and Barbuda’s Prime Minister Gaston Browne has already described the move as “treason” and an act of hostility against his country.

Efforts today to reach Minister of Tourism and International Transport Richard Sealy were unsuccessful. But in an interview with Barbados TODAY, Dr Holder said he was focused only on carrying out the mandate of the shareholder governments – Barbados, Antigua and Barbuda, St Vincent and the Grenadines and Dominica – that all agreed on a restructuring plan for the airline when they met in Bridgetown on February 13.

LIAT chairman Dr Jean Holder
LIAT chairman Dr Jean Holder

“These are the only proposals that are engaging my attention. I had a meeting of the board on March 26, which is last Thursday, in Antigua. It was attended by all the directors, including three directors from Antigua and Barbuda, and those three directors included two ministers who, as far as I know, sit in the Cabinet of the government of Antigua,” he stressed.

“I certainly as chairman of LIAT reemphasized our obligation to implement the mandate that was given to us here in Barbados on February 13 and all of the directors there, including the Antiguans, agreed with that approach and that is what I am very intensely engaged in at the present moment.”

“I am not going to be distracted by rumours here and rumours there about what I or the board or the shareholders are doing,” Dr Holder added.

The LIAT chairman acknowledged that the agreed restructuring proposal would be painful and even though the overhaul meant sending home staff it had to be done.

“It is not something that one likes to do, but it is something which we agreed to do and I have no choice but to do it. I see the matter that was ratified on February 13 as the solution to stabilizing LIAT. I think we all agreed at that meeting that that’s the way we ought to go. Everybody that came to that meeting agreed that was the way to go,” he insisted.

Browne, in a radio interview in Antigua, said he planned to meet with LIAT’s chief executive officer David Evans to find out where the proposal for a Barbados airline originated and if he discovered that the carrier’s boss “hatched” the new plan he would be demanding his resignation.

The proposal not only outlines the approach, methodology and structure for a new Barbadian airline, but even projects a net profit of US$9.9 million in its first year of operation.

On a projected timescale of nine months from incorporation of Newco to launch, the total anticipated funding requirements would be US$29 million.

“The strategic approach to the structure of Newco would be based on moving a number of historic fixed airline costs to a variable cost basis via outsourcing. This has the benefit of reducing high staff front line and overhead costs and gives the airline the flexibility to select service providers on the basis of cost and service quality without being tied to long term and ever increasing fixed staff costs,” it states.

Areas earmarked for outsourcing include base maintenance, ground handling, call centre and revenue accounts, all of which are typically outsourced in many small to medium sized airlines and in almost all low cost carriers. These activities currently employ over 300 staff in LIAT.

“As a consequence, it is envisaged that Newco could operate a fleet of 10 aircraft with just 300-350 permanent staff. Retained activities would include crew and operations, finance, commercial, HR [human resources] and legal,” the document states.

It further forecasts a three-year network development plan that would see the airline capitalizing on Barbados’ growing importance as the key hub and transfer point in the Eastern Caribbean with additional gateways in Antigua, Port of Spain, and Ogle, with some of the smaller capacity markets in the north being served through a franchise partner.

18 Responses to One route

  1. Michael Carrington March 31, 2015 at 2:51 am

    very well put mr Gabriel Abed , I agree with you to the fullest

  2. Ezekiel Baker
    Ezekiel Baker March 31, 2015 at 3:14 am

    I’m sick of poor management in the Caribbean region
    There are less than five millions human population spread across the region, What should be putting forward is working towards one and only one regional, national and international airline company, does any of the island believe they can compete with major airlines company who has billions in reserve. Then they need to rethink again.

    • Gabriel Abed
      Gabriel Abed March 31, 2015 at 3:45 am

      Liat is by no stretch major and their reserves are not enough to keep them alive if competition touches down with the right entry permissions.

    • Miguel Carlos Jose Humphrey
      Miguel Carlos Jose Humphrey March 31, 2015 at 10:22 am

      That’s why they did there bet to get rid of RedJet…it could have worked but they jumped the gun, next time keep it quite, get the red tape out the way first and then launch your planes in the air. No one can stop you then.

  3. Richard Terrelonge
    Richard Terrelonge March 31, 2015 at 4:59 am

    We can’t get bandages for QEH or remove rampant infections in the hospital and we can find money for airplanes.

  4. Tony Webster March 31, 2015 at 6:38 am

    This is very a very troubling development: the gentleman hand-picked and charged with re-configuring and running LIAT well… now recommends killing it off….and starting NEWCO from scratch…after a decade or so continually re-assuring LIAT shareholders (and its long-suffering passengers)…that everything was tickety-boo and beautiful!!??

    Tell me again: this government is gonna run an airline? Profitably? Has Jesus returned? What , eactly, is NEWCO ganna do..that LIAT cannot now do…perhaps with major surgery? The only conclusion is that LIAT is un-sustainable, even WITH surgery, and a “mercy killing” is inevitable.

    I wonder if anyone has had a coffee with the guy who is going to be asked to put up several hundered (more) millions…to make newco fly, as no CARICOM government has any spare USD for this kind of “flight”. Yes, I guess you can find him up at C.D.B.
    Where’s Butch…he knows how to run an airline. Sorta. And knows when to fold one. Call Kamla?

  5. Andrew The Voice March 31, 2015 at 6:39 am

    I hear nothing but negativity, why don’t we wait until we hear all the facts and detailed proposals before we jump off all half cock making assumptions.
    They have to be a solution, just keep pressing on. Many companies have been into bankruptcy and have successfully re-emerged, lets wait and see what they do.

  6. Alex Alleyne March 31, 2015 at 7:11 am

    Barbados miss the scrip with RED JET. This LIAT sage will continue as long as there is a Caribbean where every body at each other’s throat . The slave mentality is still with us so one country must “rule”. Barbados will be “dragged” because others see our new set of Leaders as “soft” . Such thing would have never even though of under the Leasership of Barrow or Adams .

  7. Kevin March 31, 2015 at 7:41 am

    I want to support this whole-heartedly. An airline based and managed here. But whenever government gets involved in anything, they seem to mess it up e.g. RedJet & I could go as far back as Congaline! I hope this entity will be somewhat privitised, to negate any political interference.

  8. Colin Daniel March 31, 2015 at 8:11 am

    Tell me why the governments don’t put LIAT for sale and let the private run it once and for all unencumbered by thinking that goes back to the 1950’s. We all recognize that air travel is important to the region. Each government should divest 65% of their holdings in LIAT.

  9. Elroy Doyle
    Elroy Doyle March 31, 2015 at 8:32 am

    Give it to Richard Branson to run.

  10. Patrick Blackman March 31, 2015 at 9:38 am

    The problem is not Liat, the problem is the governments using Liat as a cash cow and inflating the price of airfares. When will we as a region understand that we have to work as a region and stop looking out for self interest. Liat has a monopoly in the region yet it cannot make a profit, ask youself why, someone is striping this company and we all know its the governments.

    The whole region is into tourism and yet we cannot get a two by two airline to run properly, I guess its time we get the governments out of Liat.

    • Josh March 31, 2015 at 5:16 pm

      Wholeheartedly agree with you Patrick but would add, that if one looks beyond the Eastern Caribbean, the potential Caribbean tourism marketplace is vast. At the moment, I can get from the UK (circa 4500 miles) to the Caribbean for a cheaper price than i can travel from Barbados to Jamaica. The reality is the inter- Island tax on travel is prohibitive. I can’t really comment on the benefits of Liat compared to a new entrant into the market but what I can say, is current prices albeit via Liat or Caribbean airlines are prohibitive to inter-island travel – in my view, this is due to unnecessarily high inter-island travel taxation which should be weighed against any potential long term tourism benefits. If the Bajan government can pursue this initiative in an inspirational, future proofed way then my view is it could be a ‘mint’ in supporting the Barbados economy. Equally that would require a reduced focus on the dying sugar industry; a review of tourism on the basis of building any additional capacity to meet additional predicted demand and, immigration services to be a bit less racist and to see all tourist as ‘cash cows’ unless they prove themselves otherwise.

      I think sometimes we get so diverted by our focus on looking down on other islanders instead of seeing how we can work to a mutually beneficial future. I actually think such a venture would be good for Barbados if they could pursue it in a holistic, non nationalistic way – unfortunately however nothing i have of the government thus far suggests this type of visioning falls within their capability.

  11. Leah Husbands
    Leah Husbands March 31, 2015 at 11:52 am

    Honestly why must governments be involved at all, all that is needed is permission to enter each port. There was Red jet, however because other islands were upset, they were denied entry. An airline should be privately owned, the governments of the Caribbean will make money when they dock at their port smh. Stop asking the government for money and things, when they realise we don’t need them as much is when they will stop doing the rot they all do.

  12. Andrew Rudder March 31, 2015 at 12:51 pm

    Here we go again! I have worked in the Air line industry and am also qualified in Aviation Maintenance Management. Over the years we have seen L.I.A.T operate as a restructured (1974 Ltd). Can we ask of today; What was restructured? Every year in resent times we hear of a failing air carrier. It’s surprising an air line running in the red has a positive safety record. Politicians are not aviation experts and I think Operations Managers at all stations should show the involved governments why the airline is failing and surgically repair any discrepancies at its station. If that is not addressed, then it’s left to the politicians to railroad this airline for personal and regional reasons.

  13. Andrew Rudder March 31, 2015 at 1:26 pm

    I can remember the old days when farmers in the inter islands depended on L.I.A.T for live stock, plants, Tractor and farm equipment. Hatcheries moved chickens and eggs on its early morning flights before sun rise. Government ministers too flight to meet with other island politicians and the media. The Avro Rolls Royce Darts were reliable and sturdy. Now the cheaper the better. Doesn’t work so in Aviation My friends. Never should have bought Tri Landers. That’s the start of it. When buying Aircraft check its track record. At the time of the Tri Lander purchases of North American Rockwells would have given better service records. Past Primeminister of Barbados Errol Barrow knew of that. Some times it pays to listen may tou be from Antigua, Grenada, St. Vincent and the Grenadines or Barbados. That bit was on the mechanical discrepancies now what about management discrepancies?

  14. Patrick Blackman March 31, 2015 at 7:55 pm

    Josh, I agree…

  15. Sam Clarke April 1, 2015 at 11:05 am

    What should be contemplated is to let market forces prevail and if LIAT should die, so be it. I am always afraid of governments owning anything, for then comes the nepotism and political square pegs in round holes.
    Governments, should get the hell out of owning any such business and let private enterprises and the market forces make that call.


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