St Lucia calls for LIAT shake-up, guarantees EC$3 million loan

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St Lucia calls for LIAT shake-up, guarantees EC$3 million loan

St. Lucia has called for a shake-up of the financially strapped regional airline LIAT, as it agreed to guarantee a $EC 3,000,000 loan for the airline now undergoing a modernisation of its aging fleet.

“It’s not just a matter of changing the chief executive officer but dealing decisively with a problem in management that has been inherited over the years,” said Prime Minister Dr. Kenny Anthony.

The airline, which last week had been forced to cancel many of its flights because of a strike by pilots, has been without a chief executive officer since Trinidadian Ian Brunton resigned in September.

Dr Anthony, who is also the finance minister, said that there was also a need for a complete overhaul of the airlines business model in order to ensure its long-term sustainability and recommended a revision of operations and logistics.

Dr Anthony said that LIAT, which flies to more than 21 destinations daily, must stop operating in a traditional manner believing that the only two bases it can have in the region are Antigua and Barbados.

“It has to rethink, for example, where is it in its best interest to have its maintenance facility, these are questions that loom very large and it can’t any longer be a question of historic entitlements where governments are putting money,” Dr Anthony said of the airline, whose shareholder governments are Antigua and Barbuda, Barbados, Dominica, and St, Vincent and the Grenadines.

Castries has now become the fifth regional court to have a stake in the airline that in September signed a US$65 million loan with the Barbados-based Caribbean Development Bank (CDB) to finance the purchase of aircraft in the context of a fleet modernisation project.

LIAT said that the loan agreements “provide for the loans to be on lent-to and repaid by LIAT over a 13 year period following a grace period of two years”.

The fleet modernisation project involves the replacement of LIAT’s aging fleet through a combination of lease and purchase of aircraft; the transition costs associated with the changeover; the upgrade of maintenance facilities.

Dr Anthony said that while his administration was lending support to the regional airline, it was doing so cautiously.

“We are prepared to agree to a guarantee, in other words they are not the ones taking the loan and we are merely guaranteeing it.”

“The reality is that it’s not money up front which we are taking from the treasury and passing it on to LIAT. But regardless we have to very careful because all the loans you take end up being ascribed to your GDP, because it becomes what is called a contingent liability,” he said.

Dr Anthony said that the guarantee comes with stipulations including the selection of routes which he contends should be market driven.

“We have to review carefully the routes selected by the airline, to make sure that the people of St. Lucia are not disadvantaged, as we think that they have been some very bizarre routes.”

“There have been instances where for example you fly past St. Lucia to go to Barbados to pick up an aircraft from Barbados and then return to St. Lucia.”

“So that’s an issue for us and we need to determine whether LIAT is acting is acting in a fair manner and whether there is equity in its decision to support certain routes,” he said, welcoming the decision also to modernise the aging fleet.

Dr Anthony said that the St. Lucia government remains firmly behind LIAT which he said was essential for air travel across the region.

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9 COMMENTS

  1. “The reality is that it’s not money up front which we are taking from the treasury and passing it on to LIAT. But regardless we have to very careful because all the loans you take end up being ascribed to your GDP, because it becomes what is called a contingent liability,” he said.
    Quote by our prime minister. It is Still a liability on slu books

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  2. thts why some of us will remain ignorant cuz we dont read and analyze. we hear the word loan and immediately red flags are raise.
    think some of u might be misled. the government "Guarantees EC$3M" loan simply means that the government is signing on as a guarantor, meaning they will be the ones repaying the loan should LIAT default on its loan payment obligations to the CDB. see like wen u go to a bank for a loan and u need collateral? well the government in other words forms $3M of the total collateral

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  3. A loan guaranteed by a third party in the event that the borrower defaults. The loan is quite often guaranteed by a government agency which will purchase the debt from the lending financial institution and take on responsibility for the loan.

    think before yall speak people!

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  4. So while my salary stayed the same I still have to pay higher fuel charges as well as VAT, from which they will take and give to LIAT for what???? He and his deputy have done nothing but disgust me this week! Papishow!

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  5. This is not a strategic move? SLU shouldn't have gotten involve with LIAT woes; Board of directors and top management should be held accountable as well. The solution is not for another island to increase GDP for LIAT. Maybe Virgin (Branson) will consider taking over LIAT

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  6. Not a good move St Lucia Government especially one week after you raise Fuel prices on us just ahead of the Christmas season.

    What a waste of taxpayers & VAT money.

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  7. The tough talk by our PM will unfortunately not change the fact that we will never see any returns on this $3 Million dollars.

    LIAT will continue to operate just as it has for the last 30 years. The CEO who just resigned when he was announced promised Caribbean nationals that he would turn the struggling Airline around. Everyone said that he was the best man for the job, he being a former pilot. He has since resigned.

    Today, LIAT is much worse off than it was one year ago before he took over. Its not just the Management, LIAT's entire business model needs to be revisited. Bad idea Mr. PM!

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  8. I am not surprise...$ 3 millon down the drain and poor children donn;t have books...feeding programme is insuffient...Let liat die its natural death...invest in a ferry...that will take care of travel and trade...

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