ST. JOHN’S, Antigua, Mar 11, CMC – Antigua and Barbuda Prime Minister Gaston Browne says the regional airline, LIAT, is now at the cross roads and the plans to restructure the airline must be carried out as “an absolute imperative”.
Speaking on radio here following the meeting in St. Vincent and the Grenadines on Saturday that was attended by heads of government from five Caribbean countries, as well as LIAT’s executive managers, Browne said all stakeholders must be prepared to make sacrifices for the future of the cash-strapped airline.
He said one of the areas would be in the remuneration paid to pilots and management, and that the restructuring plan calls for shared benefits and shared burdens.
“In fact, 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,” Browne told radio listeners.
The major shareholders of the airline are the governments of Antigua and Barbuda, Barbados, St. Vincent and the Grenadines and Dominica, and efforts are being made to get some other Caribbean governments to either purchase shares or make financial contributions to the airline that operates 491 flights weekly across its network of 15 destinations.
Browne said that the Barbados-based Caribbean Development Bank (CDB) did a study some time last year in which it concluded that the most expensive option to pursue is to allow LIAT to collapse “because we would have to form a new entity”.
“That is just more expensive than having a restructuring of LIAT,” Browne said.
The CDB report was the main agenda item at the meeting over the last weekend. Last month, CDB President Warren Smith said he was “disappointed” with the progress towards executing a plan the bank funded to stem losses, improve efficiency and reverse a sharp decline in passengers using LIAT.
The study, which was completed in mid-2018, and presented to shareholder governments, outlined the airline’s challenges and opportunities, and put forward a series of recommendations.
“I must confess that I am disappointed that those recommendations have not been taken on-board in the way in which we had anticipated they would have,” Smith told the online publication, Barbados TODAY, as he complained of “very little progress to date on the restructuring effort”.
“One would argue that it is taking place in the context that a number of countries are facing financial difficulties and they had to put their fiscal situation first, but I think sometimes we are not sufficiently farsighted in the way in which we approach these reforms and we don’t recognize that many of our countries benefit quite a bit from aviation.
“The study is before the shareholders. It is for them, in collaboration with the management of LIAT, to make the appropriate changes that can put the airline on a different footing,” he added.
Browne said that it is imperative that the report to restructure the airline is implemented immediately.
LIAT’s $60-million debt will also need to be addressed under the new plan, and Browne said the airline will be operating on a minimum revenue guarantee scheme which has to be met by destinations where it flies.
“In other words no more free lunches. So all the countries that have routes which are not viable, LIAT must be given a minimum revenue guarantee payable annually,” he said, calling on pilots also to “understand that LIAT is not in a position to improve their remuneration package at this time”.
He told radio listeners that all stakeholders at a recent meeting had agreed to cooperate fully “but I am told the pilots are still making additional demands on LIAT”.
Browne said that the pilots would need to be careful, as at least two of the shareholder governments “are not in the mood for any foolishness”.
“So if they think they can frustrate the issue they do not have any leverage at this point,” he said, adding “if they wish to ensure LIAT’S survivability and to maintain their jobs, they need to cooperate fully”.
Prime Minister Browne said also that the severance for pilots could also be in jeopardy.
“I want to tell you the consequences will be dire, a word to the wise is sufficient,” he told radio listeners.