Eastern Caribbean governments rushing to save LIAT

Caribbean governments are looking towards securing financial assistance from an external financial institution for the regional transportation sector amid concerns that shareholder governments may be forced to close down the cash-strapped regional airline, Leeward Islands Air Transport (LIAT).

Barbados Prime Minister Mia Mottley, whose country is one of the 4 major shareholders of the Antigua & Barbados-based airline, has confirmed that she has started discussions with the institution on support for the region’s “transportation sector”.

While she did not name the struggling airline by name, she told reporters that during her recent visit to Canada and the United States, she met with the institution’s Senior Vice-President Alexander Stubb, adding that the bank has expressed a willingness to assist with regional projects.

“The institution doesn’t only lend to the government, it also lends to private companies like the Barbados Light and Power in the past and it has also engaged here with not just national projects but also regional projects.

“And as the lead prime minister for the single market and single economy, I also had to engage in discussions with them on opportunities within the transport sector in particular, with respect to the bank and its role in the region,” Mottley said.

Her announcement comes in the wake of a statement by St Vincent & the Grenadines Prime Minister Ralph Gonsalves, earlier this month, that the regional carrier may be forced to close its operations after Caribbean governments appear reluctant to provide the necessary cash injection needed to keep the airline flying.

Speaking on a Grenada Broadcasting Network (GBN) programme, Gonsalves said only Grenada so far had responded positively to the call for US$5.4 million to help the airline deal with its current financial problems.

“Prime Minister Keith Mitchell has put in approximately US$1 million towards emergency funding because he is interested in seeing LIAT remain in the sky”, Gonsalves said, hinting that LIAT, which has a complement of 10 aircraft will soon have to be made on the way forward.

Three of the aircraft are owned by the Barbados-based Caribbean Development Bank (CDB) that provided the funds to the regional government shareholders to purchase them while the 7 others are leased.

“We probably will have to ask the CDB to sell those 3 aircraft and operate 7 of them and then get another 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 & Tobago which is not economical.

“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,” Gonsalves told the GBN programme, adding that a new airline would then have to be the next option for the region if LIAT is closed.

Apart from Barbados, the other shareholder governments of LIAT are St Vincent and the Grenadines, Dominica and Antigua & Barbuda.

Earlier this month, LIAT said despite pilots and its workers across all its 15 destinations agreeing to a 6 percent salary cut, the airline is still facing a severe financial problem and may require additional salary cuts from its employees.

According to an internal document seen by the Caribbean Media Corporation (CMC), following a shareholders’ meeting in St. Vincent & the Grenadines, the regional airline said that the 6 percent cut did not go far enough.

“The shareholders are of the view that this proposal did not go far enough and that the 6 percent cut did not meet the immediate cost reduction objectives of the company at this time.”

The document said that the shareholders are “considering additional measures to address the financial challenges of the airline and that it would continue to update staff on discussions and the proposed measures that will be agreed upon”. -(CMC)