Caribbean News Now!

By Julie Carrington

BRIDGETOWN, Barbados (BGIS) -- Confronted with staggering losses to the tune of EC$46 million last year, the shareholder governments of LIAT have formulated a short-term rescue plan to stem the deep-seated cash flow problems, which continue to plague the regional carrier.

Chairman of the three shareholder governments and prime minister of St Vincent Dr Ralph Gonsalves, made this disclosure during a media conference last Monday, following meetings with the shareholders, board and management of LIAT and the unions.

Based on an assessment of the airline's performance, he reiterated that last year, LIAT lost EC$46 million and EC$20 million in 2010 and officials were working hard to turnaround the situation.

Gonsalves said the ongoing economic crisis, price of aviation fuel, competition on certain routes with RedJet, Caribbean Airlines (CAL) and other airlines, plus the cost of fleet maintenance had not helped the situation.

"We took a series of decisions today [Monday]...we adopted from the board a series of proposals relating to a recovery plan in the short-term, which would stem some of the cash flow problems. We addressed a number of routes which would have to be reassessed and this is a continuation of work that has already been ongoing....," Gonsalves underlined.

Additionally, the chairman said issues related to LIAT's pension fund with CLICO was also discussed and a decision was also made to convene a meeting at the CARICOM level, on air transport.

Gonsalves also spoke out about unfair competition from CAL.

"...They [CAL] have a very large subsidy for aviation fuel. While they pay US$50 per barrel, we [LIAT], sometimes pay US$110, US$120 and sometimes more. No one wants to stop... and no one probably can stop... CAL from coming on any set of routes, but let's have a level playing field.

"It is our contention that such unfair competition is subversive of the revised Treaty of Chaguramas and also the Common Air Services Agreement in CARICOM, and we must address this. So, I have been mandated to communicate our concerns in this matter to the government of Trinidad and Tobago," he said.

Meanwhile, Barbados Prime Minister Freundel Stuart described the meeting as successful and said all parties agreed that LIAT was "central to the ability of people to move for more than 50 years and there's no immediate intention to see that change".

Acknowledging that LIAT's position had been a source of concern for shareholder governments due to significant losses, he said it was decided that efforts would be made to stop what he described as "a very pronounced hemorrhage" at LIAT.

"...It's not easy for any business to lose EC$20 million in 2010 and then over EC$40 million in 2011. We obviously have to stop and ask ourselves some fundamental questions about LIAT and I am satisfied that our discussions today [Monday] [have] laid the foundation for meaningful progress on the issue of LIAT," Stuart noted.

The prime minister added that both the region and its people have a stake in LIAT's future. "We all have a vested interest in LIAT... the unions are interested in LIAT because people earn their living by working for the airline. Governments have an interest because the people over whose destiny we preside have to move around this region and have to do so comfortably and safely."

He further stated: "The people of the region have a vested interest too because this is our Caribbean home and people want to be able to move from one island to the other predictably and without the kind of discomfort that results from sudden work stoppages."

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