By Melanius Alphonse
Caribbean News Now Associate Managing Editor
BASSETERRE, St Kitts — Prime minister of Antigua and Barbuda, Gaston Browne’s recommendation to the governments of St Kitts and Nevis, Saint Lucia, Grenada and Guyana to come on board and purchase shares in regional airline LIAT, following LIAT’s chief executive officer Julie Reifer-Jones announcement that the carrier needs a US$5 million cash injection to stay afloat, is bearing tangible results.
The government of Grenada has reportedly agreed to an immediate financial contribution on conditional terms in a bid to keep the failing regional airline operating 491 flights weekly across a network of 15 destinations.
The regional airline debt burden is approximately US$60 million, facing dire consequences to jobs, travel and commerce across the region if not immediately addressed.
According to Now Grenada, CARICOM affairs minister, Oliver Joseph, said, “We will make a cash contribution to LIAT this month and going forward we will pay LIAT additional funds based on load factor. Government’s decision is based on what was presented at the recent intersessional.”
Inquiries into the terms and condition of the government of Grenada’s cash injection into LIAT were not readily available ahead of the planned meeting of five member states and LIAT’s executive scheduled for St Vincent and the Grenadines last Saturday.
Meanwhile, Barbados tourism minister, Kerrie Symmonds, shared concern that Barbados, albeit LIAT’s main shareholder at 49.5 percent, won’t be the lone ATM machine for the cash strapped airline, implying that the hour of decision has finally come.
Among the matters down for discussion were circumstances surrounding LIAT’s ongoing operational and financial woes and the options to proceed, including a comprehensive report, and a strategic plan well beyond the financial injection of US $5 million to keep flying across the region.
Other government shareholders include Antigua and Barbuda 13 percent, St Vincent and the Grenadines 12 percent, and Dominica with less than 10 percent.
President of the Leeward Islands Pilots Association Carl Burke told WINN FM that one of the reasons the LIAT business plan failed is because the airline cut back on the number of destinations it served and is also today operating less planes than it did before.
“They’ve gone from an airline that operated approximately 18 aircraft at one time to half that amount, we’re basically operating ten airplanes. In our opinion, the revenue that we’re getting on the 15 destinations or the markets that we are currently serving cannot sustain LIAT’s business. LIAT is a legacy carrier with approximately 666 employees.
“LIAT has basically shifted most of its operations into a hub in Barbados, in doing so Barbados should have realized there are certain administrative costs which go with having this hub in Barbados. The aircrew that has to be transferred from Antigua to Barbados is going to come at a high cost, you’re moving persons not only their personal effects you’re moving their vehicles etc, to another base.
“Due to what we call, in terms of worldwide standards, when you transfer someone from one country to the next, you’re given a cost of living adjustment this is standard throughout the world. And we had a study done by Grant Thornton which would have calculated the cost of living adjustment for the crew, pilots and flight attendants, who were moved from Antigua to Barbados and that has to be paid on top of the salary because Barbados has been deemed to be more expensive than Antigua,” he said.
The leading pilot told WINN FM that Bridgetown should have realized that taking greater responsibility for the airline would have cost consequences, including subsidizing the airline.
Barbados is currently undergoing an International Monetary Fund (IMF) four-year Extended Fund Facility (EFF). The EFF supported program aims to help Barbados restore debt sustainability, strengthen the external position, and improve growth prospects.
When pursuing fiscal consolidation or debt restructuring, structural measures are intended to put debt on a clear downward trajectory.
Minister in the ministry of economic affairs, Marsha Caddle, said last year that “Over the next four years the Barbados government will not borrow any new funds.”
Nevertheless, during an interview on Pointe FM, last week, Browne, said, “LIAT requires immediate and simultaneous implementation of recommendations including significant sacrifice from management, staff, suppliers, and shareholders to ensure the regional carrier continue to serve the Caribbean.”
• The restructuring plan which was designed by the Caribbean Development Bank (CDB) a year ago, must be implemented
• Reduction of the regional airline US$60 million debt burden
• Implementation of a minimum revenue guarantee payable annually (in particular, routes that are not viable)
• Reduction in management and pilot remuneration up to ten percent and greater efficiency system-wide
Browne told his radio audience that “all stakeholders agreed to cooperate fully,” and that “LIAT cannot survive without the efficacious implementation of this plan and let me make it abundantly clear, there is no if or maybe it has to be done.”
Ken Richards and WINN FM contributed to this report.