Airline executives, governments, potential investors consider LIAT’s viability

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By Melanius Alphonse
Caribbean News Now associate managing editor
[email protected]

ST JOHNS, Antigua – LIAT’s shareholders’ meeting last Tuesday faced a series of options in consideration over the worst financial crisis of its existence. Airline executives, governments and potential investors were in extensive discussions on business models, LIAT’s social and economic viability and air transportation in the wider region.

LIAT’s contribution to regional transport and the region’s economic viably are of significant concern to governments and business interest, notwithstanding the assertion by Saint Lucia’s prime minister that “There are other airlines and if in fact, LIAT were to shut its doors, others would be willing to step in. Maybe that’s what we need. We need a fresh start.”

Antigua and Barbuda Prime Minister, Gaston Browne tabled a strategic approach on LIAT and pledged his government “to resist any collapse of LIAT and any move to recreate its replacement.”

Regionalism, economic viability in the public interest, a public/private partnership, including a shareholder buy-out option formed part of Browne’s strategic approach to safeguard regional transport.

However, the future direction of the airline forging greater alliances while serving the wider Caribbean will mean a significant shift in how LIAT currently conducts business, having to re-examine its fleet of aircraft, reconfiguration of routes, cost of regional air travel, taxes, regulatory amendment, and a minimum revenue guarantee model.

Chief of staff in the office of the Antigua and Barbuda prime minister, Lionel ‘Max’ Hurst, said plans being developed included “interest by Sir Richard Branson of Virgin Records as a potential investor, while extended routes, a plan that was proposed by LIAT several years ago when it began considering purchasing jets with the intention to expand its network to include the United States, Jamaica and Haiti,” adding “Antigua and Barbuda offered to purchase the majority shares of LIAT owned by Barbados.”

Meanwhile, airline executives, governments and potential investors are deliberating LIAT’s viability, governor of the Central Bank of Barbados Cleviston Haynes told reporters recently:

“The LIAT situation is obviously one that is concerning and I know that regional governments are in the process of discussion trying to find a resolution,” restating that “Not having [the] regional airline impacts not only Barbados, but it also impacts all of the regional economies that depend on tourism.

“Such an airline has to be one that is economically viable. Clearly, our own financial situation and the financial situation of several of the other governments is not one in which one can continually have to inject funds into LIAT, and certainly, Barbados has had to inject substantial amounts of funds over the years in order to keep it afloat.

“I think the governments are really trying to find a more even approach to the financing of LIAT such that it can keep afloat and can continue to serve the various islands.”

Looking forward, Haynes’ concerns reflect the region’s wider economic viability with the buoyancy that LIAT shareholders will come up with the right solution and avoid adverse impact; he said: “At this stage, I feel optimistic that we will find a durable solution to the regional air transport problem…”

As previously reported, amid the regional airline’s financial and operational dilemma, chief executive officer (CEO) Julie Reifer-Jones gave the assurance [that] “LIAT is committed to connecting the region, flying to the 15 destinations across the network.”

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4 COMMENTS

  1. Since the multi-country public ownership model is fundamentally and irreducibly flawed, the best solution is a single-owner private sector model, i.e., the model followed by all successful (i.e., money-making) airlines around the globe.

    LIAT is mortally wounded; please give it a well earned mercy killing … now.

  2. LIAT has been making operational losses for many years and this has been a concern for the shareholders. Large sums of LIAT debts in the past have been written of at the expense of the shareholders governments in an effort to keep the airline operating. We have been hearing of various models for restricting LIAT but with no details. The size of LIAT staff have been a concern and in a February 15th 2015 Caribbean News, there were plans to reduce the staff number from 800 to 620, and at that time staff cost was over 27% of operational cost which the shareholders are aware of and rather than operate LIAT as a profitable entity, a staff ratio of 80 to one aircraft flying 15 destinations. Mention have been suggested that LIAT can operate its current fleet and destinations with 300 employees. LIAT may want to look at Winair operations, 25 staff per aircraft. The former CEO, David Evans, suggested staff reductions but one the shareholders objected to staff reduction. In an entity there are situations where one or more cost centers are not profitable, but overall operation is profitable. Its not justifiable for tax payers of shareholders government to pay for LIAT inefficiencies. If Sir Richard invest in LIAT, it will operate as an efficient and profitable entity and not as a social service. We need to implement a structure and operational plan for the sustainability and profitability of LIAT.

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