Submitted by M.R.Thompson
LIAT to Upgrade to 11 ATRs over a two year period
Quote from Barbados Nation Newspaper of June 27, 2013…
“LIAT, with the partial backing of some Caribbean governments, is enhancing and transforming its fleet, with 12 new aircraft over the next two years that will cost investors US$100 million.”
This very simple but not fully explained statement got me in the market for an ATR72, pretty cheap if you can buy 12 aircraft for $100m, that’s only $8.3m per aircraft. I think I’ll take a dozen at that price myself. A new ATR 72 500/600 model sells for $18 to 23m, used 10 year old aircraft still demand some $12m each.
Where did LIAT find such a good deal on these ATR72’s or is there some very creative book keeping promoting this exceptional deal. Creative booking is really a Caribbean political area of expertise. As LIAT is an airline owned by various countries citizens some questions should be asked to explain this seeming unrealistic purchase price.
Personally I’d expect to see the already ridiculously high LIAT fares increase significantly to support this purchase and maintain the bloated LIAT workforce.
Just some REDNECK thoughts.
Here is a press release from the plane manufacturer.
http://www.atraircraft.com/media/press_version/ATR-LIAT-EN.pdf
V2 LIA (formerly F WWEN) msn. 1077 is leased through Capital Aviation Services. The press release originally stated that LIAT were going to take delivery of the smaller version ATR42-600 first (48 seats) but changed it to a ATR72-600 (68-70 seats). Sadly LIAT have not disclosed to its owners (the taxpayers) where this aircraft will operate from and which routes it will be on. In my mind it makes absolutely no sense to station it in Antigua.
Here is that link:
V2 LIA formerly F- WWHEN is leased. http://worldairlinenews.com/2013/06/14/liat-takes-delivery-of-its-first-atr-72-600/
As I read it the main acquisitions will be for the ATR42 with options for up to 2 ATR72. As far as I have read they already have one ATR72-600 in service.
This doesn’t look out of line with the $100m and there must still be a market for the resale of the Dash8’s.
Still unclear whether these will be purchased rather than leased.
This article refers to a lease arrangement for the first ATR delivered this week.
http://www.eads.com/eads/int/en/news/press.20130613_atr_liat.html
Fine … But my problem with companies like LIAT is and will always be the cost to the public of the variable items, particularly the cost of maintaining senior administrators … and consultants.
LIAT had losses of 46 million EC in 2011. As a major shareholder what have we been give by way of analysis to show that this upgrade will positively impact the P&L over the medium term?
@ M.R.Thompson
”Personally I’d expect to see the already ridiculously high LIAT fares increase significantly to support this purchase and maintain the bloated LIAT workforce.”
One wonders when they are going to deal with “the bloated LIAT workforce” . Aren’t most of those employees up in Antigua? A big song and dance about how much they are going to save with the new aircraft and not a word about the workforce. Anyone know how long Mr. Jean Holder has been Chairman of LIAT?
Nostradamus
Agree with you that we the bajans and majority shareholders are paying for keeping a lot of antiguans employed,when a quarter of that number can do the job.
Move Liat out of Antigua,cut out the overtime,the high salaries like that jamaican communication specialist desmond browne who talks pure jobby restating the obvious and other high overheads.
Get efficient pronto something that corrupt ralph gonzales and just as corrupt baldwin spencer can’t understand.
Next get rid of that doddering fence sitter Jean Holder.
What has he brought to the table so far?
These regional bodies are sucking Barbados dry and we are getting squat out of it.
“These regional bodies are sucking Barbados dry and we are getting squat out of it.”
..But Bajans like um so…We spend so much time trying to pull down fellow Bajans that any ‘outsider’ can pull the wool over our eyes
#shameful
Again, like I say, the variable costs need to be addressed …
Or that should really be the administrative costs … my appologies
The Dash 8s have demonstrated that they are durable aircraft in our harsh atmospheric conditions ie. volcano/sea air etc. What assurance do we have that the ATR has a similar history?
Hi David, they have to be more than well suited for operating across the Caribbean.
Wings Air Indonesia operates ATR 72-500’s and -600’s. The fleet is due to reach a total of 60 aircraft by 2015.
Operating over something like 6000 inhabited islands, and in an environment with volcanoes that erupt and almost brought down a 747, rough jungle airstrips, smoke from forest fires that reach Singapore and Malaya blocking out the sun, etc.
I can only say that if EWB was still with us that there is no way Barbados would be any major shareholder in LIAT.LIAT is Antigua and that administration has continually foiled all attempts to move the operation out of Antigua to a more enlightened country where oversight might be more revealing.LIAT is possessed of inefficient card bearing management whose places are secure once they tow the line.LIAT is concerned about making deals under the counter,jobs for the boys,scams by its line staff.Their pilots and engineering staff are to be commended for maintaing the fleet over time.Barbados should rid itself of this unnecessary burden on its already overtaxed citizens.Ask COW,Bizzy and Kyffin how dependable LIAT’s service is.
David
Lets be real man, LIAT cannot even pay for fuel for the its aircrafts some months and we think they can buy US$100 M in new planes? These are lease plans which probably are owned by companies who have raised the financing on the strength of the lease payments from LIAT.
The first time LIAT don’t make lease payments for a month or two you will see who the owners really are.
David
The bigger the plane, the more they cost, the more they cost, the more the opportunity.
Which get paid first, the Leasing company or staff?
StarCom News carried a piece just two days ago that LIAT were asking staff to wait a few extra days for their wages.
@ Playing with Plato | June 27, 2013 at 11:21 AM
“The first time LIAT don’t make lease payments for a month or two you will see who the owners really are.”
What you have said is the Truth. You know what you talking about.
Some months LIAT find great difficulties in meeting its fuel bill payments.
Unless the Government of Barbados increases its subsidies to that airline we would see what you have alluded to come to a reality.
What is required is a serious cost reduction and management restructuring exercise especially at the administrative and overheads cost levels to make LIAT viable enough to make those lease payments.
Unless Antigua is prepared to make a serious political undertaking of financial support and commitment to shareholder type responsibilities the management and headquartering of that airline should be moved to another shareholder based location.
The Government of Barbados did not help RED JET , so why help LIAT?
They help LIAT by letting REDJET DIE , how can you help one before you help two. . ?
http://epaper.barbadostoday.bb/
Thanks Sid, Barbadians have to google and get info ever which way.
For too long Barbados has been bearing the greatest burden of the ‘Little Eight’.We have to wake up and demand equal investment — equal opportunity. Check RSS, LIAT and other similar entities.
Sasquash
No problem David, conditions that side of the world can be very harsh. At one stage we were without supplies for 6 weeks during the monsoons and we lived on corned beef hash and flour made into chappaties.
When I asked an overflying reconnaissance aircraft if he saw any holes in the clouds where we could get a transport plane in he told me he had been above 50 thousand feet and hadn’t seen the cloud tops.
One attempt to fly into an up-country airstrip was horrendous and had to be abandoned that day after we were tossed around very violently in cumulo-nimbus cloud.
The next day we had to weave around and up and down around mountainous cumulous cloud formations but we got there.
Because of the extensive jungle coverage they depend on planes to get from one place to another and at that time there were people who had never sat in the seat of a car but had flown countless times.
Get efficient pronto something that corrupt ralph gonzales
What a piece of work fat boy is he brings nothing to the table besides hot air and the nastiest form of cunning
@Sid
Based on your last comment it is probably moot to ask if the ATRs are as adaptable as the Dash 8s in negotiating some our very severe runaways strips to be found in Anguilla, Dominica etc.
I don’t see why not.They operate in climates such as Alaska where air services are maintained in pretty atrocious winter conditions where I would definitely not feel comfortable flying or being flown.
I doubt any of the strips can in the Caribbean can be worse than some of those in the jungles out east. Some are mud, some are grass and others are grass and gravel. The tarmac runways are limited to the large conurbations.
During wet periods pilots have to be cautioned not to brake in the first 200 yards or so on landing because of the skid risk.
It would be interesting to find out how LIAT went about the selection. What about the jet (Bombardier)?
Is there a business plan to show how the fleet upgrade will reduce the P&L hemorrhaging?
Barbados as the largest shareholder needs to apprise taxpayers for godsakes.
Begs the question, jets are more expensive I suppose but the Bombardier Q400 turbo-prop and the Brazilian Embraer EMB-120 would be alternatives.
All have excellent records.
David,
When is the last time you saw LIAT (1974) Ltd audited accounts or caught sight of a recent business plan? It’s as if Government’s do not feel any ANY obligation to keep the taxpayers informed. LIAT’s account should be published in the media or online EVERY year.
@Adrian
You would think our tax money is being used and therefore WE the people should be entitled to see statement of accounts.
Hi Adrian,
Even if they did would you believe them?
NRON, world.com, News of the World, governments snooping on every citizen, The Anglo-Irish Bank comedy actors, Police corruption, NHS tax dodging and pay-day loan scandals for which news broke today — probably only the tips of several icebergs.
More fiddlers than a worldwide violin marathon competition.
You can’t trust anyone these days.
and that includes the BHTA
I like the Dash 8’s
I like Bomdadier
I like LIAT
A lotta people tell a lotta lies on LIAT
LIAT’s arrival record is not anywhere as bad as people say.
In the Caribbean we can sudden severe very localized rain storms with thuder, lightning.rtc. LIAT does not take off in those. Do we want them to?
To prove a point? To whom?
We, we don’t know when we have a good thing.
I like LIAT’s pilots
I like LIAT’s engineers.
I like LIAT’s mechanics.
@Simple Simon
Do you like the fact that LIAT, of which Barbados is a major shareholder, loss 49 million EC in 2011?
AL wrote:
“When is the last time you saw LIAT (1974) Ltd audited accounts or caught sight of a recent business plan? It’s as if Government’s do not feel any ANY obligation to keep the taxpayers informed. LIAT’s account should be published in the media or online EVERY year.”
David responded:
“You would think our tax money is being used and therefore WE the people should be entitled to see statement of accounts.”
Coincidentally, earlier today I came across for the first time this quote by Patrick Henry, one of the USA’s founding fathers:
“The liberties of a people never were, nor ever will be, secure, when the transactions of their rulers may be concealed from them.”
Does it not bother ANYONE that if the region is to be a cohesive force operating on a plank of functional cooperation then we need to solve the problem of affordable travel across the region? Instead we have the idiots like Wickham, Singh, Girvan et al shouting about movement of labour but no equal voice regarding regional air travel. How can one exist without the other? It is why BU will always regard their regionalist posture as disingenuous.
We have 30 regional destinations which LIAT is expected to serve BUT only 3 major shareholders (Barbados, Antigua, St. Vincent) with Dominica recently coming onboard. Should this not be a priority of Caricom that other countries must step up or…?
@David June 27, 2013 at 9:54 PM …”Do you like the fact that LIAT, of which Barbados is a major shareholder, loss 49 million EC in 2011?”
No David, of course not. But I like it that LIAT gets me very, very, very safely from here to there and back to here.
Of course ideally they would do the safe thing and the money thing equally well.
But if I have to choose between safety and money, then I put my money on safety. LOL!!!!!!!!!!!!!!!!!
@David “LIAT, of which Barbados is a major shareholder”
CORRECTION: Barbados is not a major shareholder in LIAT.
We the long suffering Bajan taxpayers are major share holders
@David “Instead we have the idiots like Wickham”
David you can’;t call my main man Wickham an idiot.
And less we forget. a rich white American fellow like Allen Stanford with all the t’ief money at his disposal (and super-duper business man that he claimed to be) could not make a profit with Caribbean Star and Caribbean Sun either.
Maybe it is not possible to run LIAT profitably.
Is it not time that we acknowledge that LIAT is in fact public transportation, and that like most public transportation systems (buses/trains/small regional air carriers) will always need to be subsidized?
Isn’t it time to regard LIAT as a public service like elementary education and immunizations. We don’t make a profit from education and immunization l’il children either and I don’t hear nobody belly aching ’bout dat.
If is was possible to service these multiple, small air routes in the Caribbean profitably don’t you think that some smart business man or woman would have bought LIAT long time?
ac,
The BHTA (Barbados Hotel and Tourism Association) is a private organisation (company) but as a former Director, I NEVER had to ask for
a copy of their audited accounts. It was given to me automatically and freely
available to all members and in fact just about anybody that asked.
To repeat, ANY entity where the Barbadian taxpayer has a significant financial interest should made to publish their annual accounts.
@ Simple Simon
“And less we forget. a rich white American fellow like Allen Stanford with all the t’ief money at his disposal (and super-duper business man that he claimed to be) could not make a profit with Caribbean Star and Caribbean Sun either.”
Stanford was not in the business of making profits. He was in the business of using other people’s money for his own ends. Even if LIAT needs to be subsidised don’t you think that taxpayers should feel that it is being run in a business-like manner and whatever subsidy it may need is kept to the absolute minimum.
You think it is an accident that LIAT is headquartered in Antigua, one of the most corrupt islands in the Caribbean. You ever wonder why Stanford set up in Antigua?
Interesting to listen to Ralphie on the news today. He has a vision for LIAT flying the Haiti, Panama and other routes in South America. Let us hope he is able to first lead LIAT to better service the routes of the Caribbean which one can only hope is its priority one goal.
@ Nostradamus | June 28, 2013 at 8:58 AM
The pertinent points you make are well taken.
Even if we accept that LIAT serves more of a public good than as an investment to earn a return (profit) it is in the interests of shareholders to ensure at least proper management to minimise costs.
Leaving LIAT headquartered in Antigua is not in the interest of its shareholders.
@Miller
But successive governments have been satisfied to leave the headquarters untouched. What does the economics suggest about the requirements of the headquarters location?
@ David | June 28, 2013 at 6:40 PM
The economics long ago suggest that T&T was ideally suited for the LIAT’s HQ.
But the other social negatives in T&T militated against such.
Bim was the preferred alternative but petty insular rivalry along with weak Bajan political leadership even under OSA made Antigua untouchable.
It was constantly argued that Bim already had too many regional and international organizations like CXC and CDB and the other OECS territories were being deliberately suppressed in their aspirations to be more “developed” like Bim.
Do you recall the ‘socio-economic apartheid-like’ divide between the MDCs and the LDC’s?
@Miller
Understand you comment but where is the economic argument?
@ David | June 28, 2013 at 7:14 PM
What do you mean by the “economic argument”?
In the absence of consistent and reliable financials or updated business plans one can only conclude that the economic argument must rest on the unsustainable high cost structure that airline has to operate under.
From what can be gathered much of that airline’s high costs can be attributed to the excessively high overheads especially at the administrative and management levels fixed in the Antigua-based HQ.
Unless that category of cost can be brought in the open for restructuring and brought under control no savings of any real economic value can be achieved.
There is very little than can be done about the other fixed costs like lease payments or variable costs like fuel giving the island hopping nature of the business and highly improbable savings from economies of scale.
@Miller
You have made the point, how can we discuss that LIAT headquarters is bloated/inefficient and similar descriptions if we have not been reviewing relevant financials?
@Adrian
In fairness to Ralphie have a look at this link. LIAT maybe examining a code sharing arrangement.
http://www.antiguaobserver.com/liat-commences-expansion-talks/
David,
The SVG Prime Minister may want to go to all the places he mentioned, BUT then there is the reality.
The maximum range of the ATR72-600 is 891 nautical miles (1,025 miles) but if full, the maximum average speed would be restricted to 275 knots.
Assuming you would want to operate from the islands with the largest population and best connecting flight potential (ie: Barbados) then consider the following, showing MILES distance:
Barbados – Kingston – 1,192 miles
Barbados – Port-au-Prince – 925
Barbados – Panama – 1,380
Barbados – Manaus – 1,115
Barbados – Belem – 1,258
Then consider the maximum loaded speed, pilots hours, possible crew overnights and aircraft utilisation.
The Q400 (Bombardier) is capable of a maximum loaded range of 1,014 miles at an average speed of 360 knots.
I assume that the SVG PM is fully aware of the type of aircraft ordered and its limitations?
FLYING TIMES (non stop IF technically possible) from/to Barbados:
Kingston – ATR72 – 3.77 hours – Q400 – 2.87 hours
Port-au-Prince – ATR72 – 2.93 hours – Q400 – 2.23 hours
Panama – ATR72 – 4.37 hours – Q400 – 3.33 hours
Manaus – ATR72 – 3.53 hours – Q400 – 2.69 hours
Belem – ATR72 – 3.98 hours – Q400 – 3.04 hours
@ David | June 29, 2013 at 9:28 AM
The assumption is made that the airline’s excessively high overheads (administration costs) have resulted in the need for excessive subsidies over above what is required to keep the operations functioning at a minimum level of efficiency given the constraints and operational environment of the business.
This assumption is based on old historical financial and management accounting data about administrative costs and not the other “pure” or strict operational costs like separate and duplicating user charges at each landing site. As was said earlier there are other ‘uncontrollable’ cost elements like fuel and lease payments that should be removed from the analysis as to why LIAT is so ‘cost burdened’.
We will need to see current financials to see if the situation with the abnormally high administrative costs has gotten worse overtime or has improved vis-à-vis other cost elements.
@Miller
You have already opined that in the case of LIAT it performs a public good as well. Given that LIAT has 3 main shareholders (Barbados, Antigua, St. Vincent) BUT serves several islands in the Caribbean who do not contribuite substatially in a financial way; sure you must factor in the equation?
David,
you will notice I stayed away from Caracas because Conviasa operates an all jet fleet. Same could apply with COPA on any code sharing for Panama and if you even mention Caribbean Airlines possibly code sharing on Kingston, then you have to think about their fuel subsidy advantage.
Who’s left?
@ David | June 29, 2013 at 10:46 AM |
And that is why the fares to those non-shareholder destinations need to be bumped up to reflect the “true” cost of operating to those destinations.
It cannot be perceived as a public good in those non-contributing destinations if the non-shareholder citizens/taxpayers are not contributing to the costs of operations, inefficient or other wise.
Some maybe tickled by the following:
http://bajan.files.wordpress.com/2013/06/liat.jpg
@ David
The clip is very funny. It reminds me of my recent trip. When we got to SVG from Barbados, someone came to announce that the pilot and crew were m.i.a…We had to disembark and go through security checks again while we waited on the crew to appear. The crew eventually showed up and said that they had to take their maximum rest possible/due from the previous evening.
Good thing they were well rested and on the ball because no one thought to refuel while we were waiting for the crew, and we had yet another delay…
@fragile80
There are many stories which LIAT generate but when the dust is settled it is the only bird in the air.
Congrats to PM Stuart and other shareholder Caricom heads for putting the matter of LIAT forceably to T&T and Caricom. It is time LIAT started the fightback:
PM: LIAT a major concern Prime Minister Freundel Stuart. (FP) Sun, July 07, 2013 – 12:08 AM
PORT OF SPAIN – Barbados is so concerned about the future viability of regional carrier LIAT that it sought legal advice on whether its heavily subsidized competitor Caribbean Airlines (CAL) was following CARICOM rules.
Speaking to the media at the start of the final day of the 34th regular CARICOM Heads of Government conference at the Hilton Hotel in Port of Spain, Prime Minister Freundel Stuart said with Barbados the largest shareholder in LIAT, its future was of “great concern to him”, especially in light of the fact that CAL was being subsidized by the Trinidad and Tobago government.
“Now what has happened in recent times is that against the background of the Revised Treaty of Chaguaramas and its provisions, it has emerged that CAL has been buying its fuel at $50 per barrel, while LIAT has had to buy its fuel at upwards a $100 a barrel.
“In other words, the government of Trinidad and Tobago is subsidizing CAL for the purchase of its fuel and is competing with LIAT on regional routes. As far as we are concerned, and we have discussed it at many LIAT meetings, that is competitive behaviour and it’s against the spirit of the revised Treaty of Chaguaramas, and we have been engaging the government of Trinidad on that issue,” he explained. (BGIS/BW)Please read the full story in today’s SUNDAY SUN, or in the eNATION edition.