PM Writes Open Letter On LIAT

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Prime Minister Gaston Browne
Dear All,
If the majority shareholding group of LIAT is opportunistically, allowed to collapse this regional institution and form a new entity without honoring the institutions liabilities to creditors; this will be a form of State banditry.
Creditors including the staff of LIAT, for decades, provided service and credit to LIAT as an insolvent institution, knowing that they had the backing of the shareholding states.
For these states to walk away from their liabilities, is morally reprehensible and perhaps illegal.
If shareholders wanted to limit their liability, they should have ceased trading years ago, knowing that the institution was insolvent.
From my limited professional studies, I was taught that directors who knowingly operate an insolvent company is liable for wrongful and possibly fraudulent trading.
The members of the shareholding board of LIAT, participated as directors over the years and presided over most of major decisions of LIAT, including the ill fated refleeting.
The liquidation of LIAT without settling liabilities should be resisted by creditors and other stakeholders.
The possibility of legal action to stop the liquidation and protect the interest of creditors should not be ruled out. The state has an obligation to protect, not hide behind legal arguments and exploit vulnerable creditors.
Instead, minority shareholders and Creditors should call for a reorganization plan. This plan would see the right sizing of LIAT and a work out situation with creditors. All shareholder governments should write off landing and other fees owed to them and the staff and other creditors should take a hair cut to facilitate the reorganization of LIAT.
If a bloated inefficient LIAT could have made a small loss of 12M last year, it stands to reason that a lean reorganized LIAT could make a profit.
While a reorganized LIAT should be structured to turn a profit and reduce the burden on governments for a subsidy, kindly note that the benefit of a regional airline should not be determined exclusively by its profitability, but by its economic contribution and air connectivity value to the region.
Existing shareholders should be given the opportunity to surrender their shares, if they do not wish to participate in the new reorganized LIAT and members of the private sector and all governments that are willing to participate in the new entity should be given the opportunity to do so.
To deny them this option, represents a suppression of other stakeholders interests.
Antigua & Barbuda stands ready to invest $40-$54M in the reorganized LIAT and there are other governments and private interests that are willing to invest in the reorganized LIAT.
The reorganization plan will preserve route rights, including rights to US territories. Some jobs will be saved, new jobs created as the reorganized institution grows and air connectivity for Caribbean people will be assured. This will bring to an end the present chaos and confusion that the majority shareholding group is pursuing.
The restructuring will also have to look at the suitability of the fleet to service the region. A mixed fleet of 42 seaters and 19 seat twin ottos is likely to be the best mix. The 72 seaters should be returned to the Lessors, they are beyond our means. This mixed fleet will ensure both the northern and southern corridors are adequately served.
The above is a doable plan, resulting in a win win solution for all stakeholders.
Therefore, we strongly recommend the reconsideration of the proposed liquidation and to allow the pursuance of a reorganization LIAT in the interest of all stakeholders.
If we fail to do so, then every state is likely to establish a national airline, without viability and sustainability.
The airline industry is so capital intensive, it its beyond the means of any singular state, or the private sector to sustain an airline, that could meet the air connectivity needs of the region.
With the current pandemic, which will make our individual states more vulnerable, this is a time for true integration in action and not merely in words. The benefits of the integration movement should be shared in keeping with the objectives of the Caricom and OECS integration institutions.
Petty jealousies and the Poaching of each other’s business entities during a time of crisis should be discouraged. Instead, we should use our talent, intellect and creativity to attract foreign direct investments to supplement domestic investments.
Finally, the subterfuge, to hide behind illegalities and flawed opinions to kill LIAT as a perceived “predatory” airline, in pursuance of insular objectives will not work. One of the outcomes of such decision is a weakening of regional integration and less commitment to sustaining regional institutions.
We should be careful with the precedents we establish. It’s LIAT today, but it may be the OECS, Caricom Sectetariat, or some other regional institution that may suffer a similar fate in the near future. As we collapse these institutions, we collapse the integration movement.
Ultimately, LIAT will rise again like a phoenix from the ashes.
We will never allow anyone, or group of insular Caribbean leaders to kill this important regional institution.
Let’s come together as stakeholders and reorganize LIAT, in the spirit of true Caricom integration and in the interest of all.
Yours truly,
Gaston Browne

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11 COMMENTS

  1. That’s visionary and forthright Leadership..Mr. Leader don’t back down, stay focus and deligent.

  2. Dear PM Browne,

    I really respect you and support you most of the time. However, I really think you need to let LIAT go bankrupt. The reason the airline is formed as a company and not a ‘Ministry of LIAT’ is so that our country’s financial exposure is limited to that which we invested. If that is not the case, then LIAT should have been a government agency rather than a commercial company.

    Please just let it go and let LIAT go bankrupt and put it out of business. The private sector and private investors will restart a new airline and it will probably make money and provide better service. The fast we get this done and over with, the faster we can all have less drama in our lives.

    • In theory you are correct, however as the PM points out if you have presided over a bankrupt company for so many years what signal is it that you have send to your creditors all the years. Isn’t that you were giving assurances that you would stand by the corporation beyond your share capital. Just like when the board of a company gets involved with the day to day running of the corporation that means they are taking over management responsibilities and are becoming a managing board. LIAT is the same. The shareholder through the board as well have been directly involved in the operation of LIAT. They determined that unprofitable routes would still be serviced. and they determined to keep the staff compliment of LIAT. So the shareholders are totally responsible for the liabilities. I was not thinking of this when I made my comments in an earlier article. But now that the PM has brought it up I concur with him on this point.
      I hate to say this, but thank God we have Gaston at the helm to deal with these issues. Under the UPP these boys/girls were able to let Barbados become majority shareholder. And as you can see the meeting was not even cold and both Barbados and St. Vincent are talking about their own airlines. SVG Air and some OCL Barbados Ltd. What that tells you. They are ganging up against Antigua. But as I say thank God we have Gaston at the helm, cause you can rest assure he will fight them tooth and nail for Antigua and Barbuda. A real warrior. And if they succeed, I guess we can mark the fall of OECS and other institutions.

  3. The shareholders failed to make the necessary changes to make Liat more sustainable. They failed and now is not the time to lay blame but to pay the workers. LIAT must die for the benefit of all Caribbean people. Get government out and run a profitable business with government having minority shares.

  4. You can’t be serious Mr. PM. You are happy to embrace the 5 Islands Campus whilst every country is still indebted to the UWI. Where is your concern for the institution of the UWI

  5. The is a difference between letting LIAT go under or voluntary reorganize/liquidate this so that you can continue a new airline with the good assets of LIAT. I want to bring to mind the liquidation of ABIB. if the PM had let the bank fail the normal way the shock would be felt throughout the OECS. Antigua took on the burden and sold the good Assets to ECAB. They kept the bad assets and negotiated with the creditors how they would get their monies back. This is estimated to cost the tax payers of Antigua over a period of time $300 millions of dollars. Does anyone feels the stress of this arrangement. No because the manner in which it is executed. But we have saved the banking industry a total catastrophey . It is in this sphere we should think of solving the LIAT issue. Staff will not get there severance anytime soon. That has never happened. Not one company that has liquidated has paid staff in the shortest possible time. It only happened when a new owner is talking over and it is agreed that the staff would be laid off and have no claim on a job in the newly acquired entity. Some of Stanford former workers got their final severance check only last week. That after having been waiting for about eleven years. You think LIAT workers can wait that long. The shareholders need to work out how they can liquidate without causing a big disturbance in the economy and still take up their liability. And if I were one of the workers any deal is better than no deal. The company’s assets are not available. Three planes are technically held as collateral by the CDB. Hangars are not in the best state and there is no appetite in the market for them. The only asset as far as I can see are the landing rights LIAT holds. And that can be sold to the new entity and serve to pay of some of the severance. But I would take shares in the new company for that if I could see a plan. I can sell my shares or will them to my children. And if the company makes profits I can collect dividend as well. One has to understand severance is considered a build up of equity in the company.

  6. In terms of fleet selection, getting rid of the ATR 72 is agreed. On the other hand, having more than one type of aircraft is not good business sense from an operational stand point.
    My reasoning is as follows:

    1. Company spare holding will be much higher, which translates to increase cost. When you have different type of aircraft, there will be an increase in spares holding, as aircraft spares for each type of aircraft must be stocked. (Aircraft parts are not cheap!)
    2. Pilot head count will increase, as the same pilot can’t flight both types. This is a safety issue and was not allowed by the ECCAA in the past. Liat has had this issue in the past, which inflated the company headcount, which increased the operational cost. (Let’s not make the same mistake again! Been there done that!!)

    3. The ATR 42 aircraft can access most destination with the exception of Cane Fields Dominica, hence another reason why the Twin Otter is not necessary at this time.

    4. Having a mixed fleet has caused operational issues in the past. When the airline has had breakdown in the past with a mixed fleet, Avro / Twin Otter, Dash 8 series 100 / 300, ATR 72/42, passengers recovery with a smaller capacity aircraft has been difficult. In a service industry, providing good customer service and customers experience is a high priority for any business and leaving back passengers due to lack of capacity is not good customer service. It make good business sense not to make this mistake in future.

    Any new entity, should also consider a cargo service as part of its model going forward. Cargo don’t get sick and is always needed.( don’t put all your eggs in one basket). Done well will be very profitably.

  7. If they know they did not want that Federation known as LIAT.Why the heck they did not say so.I have listened to many persons saying.It is poor Management why LIAT collapsed.Not so at all.In my opinion,it was and is Intentional Mismanagement.To get that break up of LIAT.While injecting and publicly pushing their own inter regional Airlines.LIAT had too many employees for the size of it.That was not done by chance.That was done by design.Those greedy Shareholders and the LIAT Political Board of Directors are the reasons for the sinking ship.Known as Leeward Island Air Transport or LIAT.

    • Lets get real, LIAT is no longer viable it has been so for quite a while. We talk as if operating an airline is like operating a department store. All this fancy talk by PM Brown and his acolytes is like crying at a funeral. Airlines in the US have been assisted by the government with billions $$. The millions of tax dollars pumped into LIAT by its regional shareholders to keep the airline operational and keep workers employed is clearly no longer available. The tax payers are taking hit on their investment in LIAT, must the now pay more for workers benifit? Where are the redundancy programs?

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