ST. JOHN’S, Antigua, February 18, 2015 (AMG) — There may be a stay on the decisions taken at a February 13 meeting of shareholders in regional airline LIAT, following an intervention from Antiguan Prime Minister, Gaston Browne.
LIAT – the cash-strapped regional airline owned by the governments of Barbados, Antigua, St. Vincent and Dominica – announced late last week that it planned to sever 180 employees and shift the airline’s fleet base to Barbados, in a bid to raise revenue, lower overheads and cut perennial losses.
But with concerns raised by constituents in the carrier’s base of Antigua – where LIAT is a major employer – Browne has officially written to Vincentian Prime Minister and LIAT Shareholder Chairman, Dr. Ralph Gonsalves, to request that no further action be taken on the meeting’s decisions.
In his letter, Browne cautioned Gonsalves that: “The government of Antigua and Barbuda has made – and continues to make – a heavy investment in LIAT, and there are consequences for the economy and the well-being of the people of Antigua and Barbuda arising from decisions pertaining to the airline.”
On the proposed move to Barbados, Browne was equally emphatic: “I am not exactly sure the proposed hub in Barbados would necessarily solve LIAT’s problems. I believe the directors and certainly the shareholders must look seriously at the issue of a subvention coming from all of the governments on an annual basis for LIAT.”
The Antiguan leader is pushing for a hold on the decisions so that he could bring the matter before his Cabinet.
What shareholders decided: Speaking to the press last week at the conclusion of the shareholders’ meeting, LIAT CEO David Evans said that the airline had “no choice” but to trim its workforce, given that 27% of its revenue was spent on staffing.
Gonsalves also added that the layoffs – expected by year-end – would save around EC$13 million per year, after an initial payout of EC$22m in severance packages this year.
Shareholders further revealed that the Caribbean Development Bank – which has already provided US$65m to finance the airline’s new fleet of ATR aircraft – has again been approached for a further cash injection to stabilize the airline’s working capital. Additionally, it was noted that LIAT loses US$11m per year in retaining seven of its old Dash-8 aircraft stock, which it is finding difficult to dispose of due to waning market demand.
The airline’s fleet base has also been tipped for relocation to Barbados, with the island being designated as the hub for four of the airline’s new ATR aircraft, leaving just two each in Antigua and Trinidad.
The Barbados move has been defended by Prime Minister Gonsalves, who said: “We have to be careful that we don’t play one country against the other to say your base is shifting from here or there, [but] you look at the performance and where you’re putting more planes for the movement of more persons.”
“It is one network and you don’t need to be a rocket scientist. The place where most people pass through in the LIAT network is Barbados; that is the reality.”
Barbados is the majority shareholder in LIAT, and its Minister of Tourism, Richard Sealy, has gone on record to rally for more of the airline’s operations to be based on the island to realise the benefits of taxpayers’ investment. The island already is the top-performing destination in revenue and passenger indicators, and the Barbados – St. Vincent route is reportedly among the airline’s most profitable.
Reactions in Antigua have been mixed. An internal memo to staff from the LIAT CEO, obtained by AMG, went at length to reassure that separations would be voluntary, and that the airline’s headquarters would remain in Antigua.
Yet, even within Browne’s cabinet, there seems to be division on the best way forward for the airline. Antigua’s Aviation Minister, Robin Yearwood, has defended the shareholders’ moves as sound business decisions, and maintains that job cuts are inevitable.
“LIAT had 14 Dash-8s in the air. Now they have 8. They must cut staff”, Yearwood told Observer AM.
“Every part of LIAT will feel the cut.”
Cover image: Clément Alloing