LIAT’s impending closure

9
Dr Ralph-Gonsalves

Source – THE NEW TODAY: Chairman of the LIAT Shareholders Government Group of Countries and Prime Minister of St. Vincent & the Grenadines, Dr Ralph Gonsalves has expressed fears that the closure of the regional island hopping carrier, LIAT is imminent as most of the countries which use the carrier services are not responding favourably to the airline’s request for US$5.4 million to ensure its survival.

Gonsalves made the statement as a guest on a popular current affairs programme in St. George’s run by the Grenada Broadcasting Network (GBN).

The Vincentian leader told the programme host that Grenada is the only government that acceded to LIAT’s request by pumping approximately $1 million into it.

“…Prime Minister Mitchell has put in approximately 1 million dollars EC towards emergency funding because he is interested in seeing LIAT remain in the sky”, he said.

According to Dr. Gonsalves, due to the lack of financial input from the other shareholding countries, LIAT’s closure is imminent.

He said that LIAT has a compliment of 10 aircraft – seven are leased and three are owned by the Barbados-based Caribbean Development Bank (CDB) due to monies borrowed and a decision will soon have to be made on the way forward.

“…We probably will have to ask the CDB to sell those three aircraft and operate seven of them and then get other smaller airline like One Caribbean to fly between here and St. Lucia, rather than get LIAT to fly on one of the routes which is going to Trinidad which is not economical to cut it”, he remarked.

“… The governments have not been responding so the shareholders are reaching a critical point now and if you ask me, what is likely to happen … there will be a transitional restructuring leading to a closure of LIAT,” he said.

Dr. Gonsalves pointed out that a new airline would then have to be the next option for the region if LIAT is closed.

However, he said that there will be consequences in terms of job losses.

Gonsalves said: “If you sell the three aircraft which are owned by the CDB, immediately that’s 33 pilots who would have to go. Then other workers will have to go, flight attendants etcetera, etcetera, because over 7 million US is required in some immediate savings, 2.53 million US required from the workers but you ain’t getting the number near to that.

“We wanted a 10% cut across the board, but we not getting that and the pilots have agreed to a 6% cut on the basic pay, that ain’t going to do anything much, and the question of the agreement…the legacy agreement, they don’t want to have new contracts.

“…So, what you probably will have to do is to start a new airline and you hire people on specific contract but I can’t guarantee that there would not be disruptions.

Dr. Gonsalves disclosed that the Leasers of seven of the LIAT planes in far away some places like the United Arab Emirates (UAE) are prepared to give cuts of between 17 and 20 percent and other stakeholders are prepared to do cuts in order to save the regional carrier.

“…I don’t think the employees fully grasp what is at hand”, he said.

Two years ago, Gonsalves said that CARICOM member states collaborated with the CDB to have a consultation on LIAT.

He said the problems facing the airline were diagnosed and three options were put forward as measures to be taken to resolve the issue.

According to Gonsalves, the first option was a proposed restructuring of the airline where “countries served by LIAT have to come into the mix and the workers themselves have to take a salary cut and the other stakeholders have to chip in.”

The second option, he indicated was to give the airline to the private sector completely, while the third option was to close it down and start afresh.

“If you even close it down and I fear that that is an option which is becoming more and more realistic, but if you close it, you have to manage in the transitional period and we need to have resources…”, he said.

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9 COMMENTS

  1. Just a sad reality. As I continually pointed out, Antigua stands most to lose if this happens. With approximately 700 persons on LIAT’s payroll here, the sound of that news hurts me all over. I have said emphatically for sometime that perhaps Antigua should have been the leading shareholder and as such far more able to direct and dictate things. PM Gonsalves have made his position known, Barbados, currently in economic woes, have more important things to study than LIAT so Antigua is left to just scratch our heads and wonder. CIP monies? Can that be used for a bailout? After all I understand that the selling of passports going well.

  2. Why don’t the governments subsidized the cost of liat, since it is important to caribbean unity.The USA subsidized rhe cost of agriculture for food security.Why we cant do the same for tourism.

  3. Option #4. Stop all and any taxes imposed on liat. And increase the base fares by 5%. Dump that 5% into a fund.. employees are already giving a 6% back. Give that back to the employees in a year or 2 as shares. This 5% can be used to offset liat cost emergency operations.

    • Why you so smart? How can I get you in front of a commitee who would actually listen? This is a brilliant idea. Absolutely brilliant. Shake my head.

  4. I think that LIAT should fold. Antigua&Barbuda can’t afford to keep the carrier in the sky more than it can’t afford to not keep the carrier in the sky.
    With CAL (to barbados and trinidad) & BA (to turks, tobago and st.kitts) along with the smaller planes from other carriers, we will survive. The question is ‘will the other countries survive?’ Let the chips fall where they may!!

  5. How about the governments contribute a 25% tax cut, 25% cut on landing fees etc.

    How about a centralized operational structure eliminate the duplication of roles.

    Stream line employment. How many flight attendants do you really need to operate flights. One might be more efficient verses two.

    Form synergies with international carriers to transfer passengers. For example BA, Virgin passengers that goes to St Martin and BVI.

    Ground staff and equipment. How many is really needed. A staff audit must be done.

    Add some smaller planes to the fleet. To go between Antigua and Barbuda, St Vincent and the Grenadines, Montserrat, trni and Tobago etc.

    Get rid of the nepotism in the company. Ask the politician to remove themselves and replaced by suitable qualified person from the private sector to represent their interest.

    Perhaps liat’s biggest problem are the politicians that knows everything about everything and still running these tiny states with huge deficites.

  6. Offer American Airlines some shares if they refuse offer the shares to Virgin and BA if they refuse offer the shares to CHINA.

  7. LIAT needs to be privatized and perhaps what the share holders should be doing is to convene a meeting of some of the more wealthy business people in the region and begin the discussion about them taking aver LIAT. Whilst LIAT do not serve Jamaica, Butch Stuart and some of the more affluent Jamaican business people should be included including CEO’s for Grace Kennedy. Jamaica Producers, Lasco Group of Companies, Mega Mart. National Commercial Bank. Jamaica Broilers, CB Group and Rainforest Seafoods. Our region have quite a number of wealthy business groups and it might be an opportunity to start getting them involved.

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