LIAT Continues to Rack-up Debt for Shareholders
There is a newly elected government in Guyana preceded by one in St. Kitts and there is the T&T general elections announced for 7 September 2015. It seems our governments (politicians) around the region have allowed themselves to be consumed by domestic issues and the idea […] of promoting regional cooperation has been relegated on the list of priorities. Caribbean people are funnelled more news about the European Union (EU) and other common markets around the globe than about Caricom. A little commonsense suggest if the 15 members of Caricom are to achieve optimum benefit from the creation of a regional space, the ability to transport people and goods (services) efficiently is a nobrainer. If Caribbean people are serious about optimally leveraging the resources of the region for economic benefit the role of LIAT must be critically evaluated as the sole regional airline. It is evident, even to aviation illiterates, LIAT has been mismanaged largely because of political interference and poor governance practices for many years.
In July 2013 the Caribbean Development Bank gave (lent) LIAT shareholders USD65 million dollars to finance a refleet. Again a little commonsense supported BU’s expectation a viable businessplan supported the decision to lend (borrow) a significant amount. It therefore came as a surprise the industrial relations challenges during the transition from Dash 8s to the ATRs, the challenge selling the Dash 8s to sustain cashflow, the petty insular and puerile exchanges between LIAT shareholders and other players, unable to pay salaries etcetera.
What is already evident – new ATRs not withstanding – Caribbean people continue to witness an overstaffed and debt riddled LIAT continuing to compromise the region’s ability to provide efficient and reliable transport. There is the popular quotation that insanity is doing the same thing over and over and expecting different results. Whether we point at the obvious incompetence of the Board and management, meddlesome politicians and recognize the challenges posed by the vagaries of our region. It is not enough for the largest shareholder of LIAT to operate business as usual.
When the HOGs meet from time to time is it unreasonable to expect LIAT and regional transportation should always be high on the agenda? If LIAT provides a service to almost all the member of Caricom is it unreasonable to expect financial support must be pledged? Why would other Caricom countries be persuaded to throw good money at LIAT at this stage given the deterioration of the balance sheet? What does it say about Caricom that it is unable to fix the LIAT problem!
BU is not competent to deliver a judgement on whether there was transparency in the decision to replace the faithful Dash 8s with ATRs. We are however competent to say that Barbados as the largest shareholder needs to wrestle control of the airline. Barbados and the other shareholders do not have the resources to adequately recapitalized LIAT. BU perishes the thought there is a policy by the Barbados government to do nothing in order to force the emergence of a debt free airline.
Barbados Underground 
@DAVID
“We are however competent to say that Barbados as the largest shareholder needs to wrestle control of the airline”
What would be the result of Barbados getting control of LIAT, my guess is that it would be another gargantuan Barbados Political Failure, shall we name a few of recent government failures, oh yes too numerous to list here.
“Barbados and the other shareholders do not have the resources to adequately recapitalized LIAT.” I agree with you here, recapitalized, operate etc., however….
“BU perishes the thought there is a policy by the Barbados government to do nothing in order to force the emergence of a debt free airline”
Even if it’s a plan to force LIAT into Bankruptcy, so that LIAT emerges debt free from the bankruptcy it’s only a matter of time that the incompetent Barbadian Politicians would have LIAT back to the same or worse situation, nepotism is ingrained in the DNA of every single Barbadian politician. All Barbados needs is several thousand LIAT employees on the public purse as more civil servants that are overpaid and under-worked.
Also LIAT my not have many assets after a BANKRUPTCY, ATR planes are being bought on a lease pay agreement which would not be a LIAT ASSET in Bankruptcy but a LIABILITY.
I have serious doubts that any Barbadian politician has the intelligence to think up such an elaborate Bankruptcy plan to gain control of a debt free entity. The more likely scenario is that LIAT goes Bankrupt and disappears from the face of the Caribbean. This would be the best scenario for the Caribbean Taxpayers. If private enterprise sees/sniffs an opportunity to make money they will start a new airline.
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Pure fraud upon the Nations in Liat, They want to start their own airline or sell it to T&T? like they do every thing else.
Soon they may call it the Late LIAT, None of the worker even heard about what is posted. So until the worker get notice of anything with LIAT its only talk. Anther setup to be defrauded,
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Perhaps , we should start selling LIAT Bonds.
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There is a valid case to be made for those countries who benefit from LIAT’s continued services to join in supporting LIAT.
But there is a far stronger case to be made for all non-shareholder governments to continue to refuse to join or contribute meaningfully to the three-ringed circus that is LIAT until, first, major changes have been instituted at the airline to install people who are qualified and knowledgeable in aviation in the two tiers which matter the most – the Board and executive management and, second, that the shareholders themselves get out of the management process.
If no changes are made, those who do go ahead and mark their signatures on the commitment line will see the inefficiency and incompetence continue, LIAT will NOT return to being a reliable airline, and there will be zero incentive on ANYONE’s part inside LIAT to do other than continue the path of incompetence, inefficiency and waste.
This means additional load on their own Treasuries – and so on their taxpayers – and continued dissatisfaction with LIAT. Which translates into dissatisfaction with those who signed them up for the additional load.
St. Lucia’s Prime Minister Anthony told St. Vincent’s Prime Minister Gonsalves no less than three years ago – recorded in public – that he would not be joining LIAT’s fiasco until changes were made. In 2015 no changes have yet been made, but Comrade Ralph is back putting the pressure on for commitment to the LIAT circus.
If I were any of those Prime Ministers – including the existing shareholders – I would have been converting LIAT to a sound commercial footing years ago, ensuring that efficiency and reliability were the benchmarks by which the Board and executives held their tenure, and replacing them when the benchmarks were not met to ensure the quality of LIAT’s service was raised to the highest it could be.
If you ask consumers to pay a higher price because of the physical inability of your product to be any cheaper – in airlines because of the high price of fuel and maintenance in an island-hopper situation – then you cannot also ask them to sit in waiting rooms for hours waiting for delayed or cancelled flights.
Not only do our politicians appear to think that such inconveniences are reasonable, they apparently also think that treating aviation and travel as a cash cow is reasonable, to the point where on some flights the taxes and fees are higher than the air fare charged by the airline. Of course, the airline gets the blame.
Politicians in the eastern Caribbean seem to be as divorced from reality as they are from proper management. This point blank refusal to even discuss the problems at LIAT, far less make any changes, mean that aviation in the eastern Caribbean will c0ontinue to stagnate and be extremely unsatisfactory – because anyone who tries to mount a competitor to LIAT will face stiff resistance from its owner governments.
One aspect of LIAT which has irked me for many years is the insistence of LIAT’s Prime Minister shareholders – who basically represent the people of their countries – that the annual accounts (if there are any) are private and nobody’s business. And I continue to beg to differ, because public funds – taxes – went into and are still going into paying for LIAT, and it is very much the business of the public wo are paying the bills.
Finally, I would like to see the CDB join the non-shareholder governments in calling for a change at LIAT to a model which at least breaks even. The CDB loaned the shareholders – through LIAT – US$65 million to pay for what will eventually be some US$250 million in purchases and leases of the ATRs, and if they continue to lend the LIAT shareholders as much as they desire then the other CDB Member states will eventually have a case for removing the executive of the CDB for irresponsible behaviour.
They would have the right to ask, for instance, whether the CDB performed a due diligence – examined the LIAT Board’s application for the ATR transaction for whether it would actually cost LIAT US$100 million or whether a scam was being perpetrated on the airline. Because if they did not then the other Members of the CDB are also on the hook for the costs if LIAT folds – Barbados is broke, Antigua may be broke, and after a natural disaster and the ongoing costs of the Argyll airport St. Vincent clearly does not have the funds to support a demand for such a financial response.
Just over a year ago, the LIAT Board chose a new CEO from quite a range of applicants. The one they chose has been there for over a year, has made no changes to make the airline more efficient, and is apparently still enjoying his fully financed visits to all the various destinations. In fact one might say he is enjoying a twice-paid retirement, in which he is doing very little but being paid quite a lot.
During his tenure the customary 30-day marker came and went, the customary 100-day marker came and went, the customary 6-month marker came and went, now he has been there a year and still nothing has been done. No staff have been laid off (despite an announcement of 180 staff going home), no changes have been made in the running of the airline, and in fact LIAT is still daily experiencing the same kinds of flight delays and cancellations which were rampant just after the “meltdown”.
In brief, we could have had a large rusting hulk of old car from the dump named “Geronimo” appointed as a CEO a year ago, it could have been parked in the CEO’s space all this time, and that would have cost the airline a great deal less. And it would have been worth quite a bit more.
On the comment that control of the airline needs to be wrestled from Antigua, it must be borne in mind that – because of politics again – the technical aviation sector in Barbados has been abysmal for literally decades. The officials are not qualified, vacancies do not go out for bids, the Department is severaly short-staffed, the problems go on and on.
In short, in too many areas the Barbados Civil Aviation Department (we do not have an Authority) is not qualified, not equipped, and not competent to oversee an airline like LIAT – not even to serve just the eastern Caribbean.
Which is why Barbados is IASA (Safety rating) Category Two – and therefore all airlines registered in Barbados will be barred from serving the USA with scheduled flights. A Barbadian registered LIAT (or “Newco”) would not be able to serve PR and the USVI, simply because it would become a new airline with no “grandfathered” route rights.
So if – as has been suggested – the shareholders are in fact deliberately destroying the airline to rebuild it in Barbados, somebody is going to be sorely disappointed at some point in time, not the least of which are the travelling public.
LIAT needs change, and it needs change in the immediate future. Or at some point those bailiffs are going to come along with their chains and locks – systemwide – and it will be “game over” for LIAT.
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There is no one at shareholder or board level to represent the interest of the Barbadian taxpayer.The minister responsible has no background or interest in aviation
the chairman has asked that he be relieved of his chair,the prime minister is a dodo and is not even a recognised legal gladiator,his supposed profession and the bajan representative on the board is in the business of mixing concrete.The fool in Antigua has no money neither does Dominica nor Ralph who made a big booboo at Argyle.Caribbean aviation is for the dogs these days.We were better served in the 70’s and 80’s.
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off message:
“The records of multinational oil giant Shell show that its pipeline from Oistins to the Grantley Adams International Airport leaked “greater than 300 000 gallons of Jet A1” fuel into the ground over more than 20 years.”
http://www.nationnews.com/nationnews/news/68637/shell-oil-leaks-fuel-farmers-drive-settlement
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Ironically there is a business class and public sector type who work very close with regional governments who are affected by an inefficient LIAT yet all seem satisfied with maintaining the status quo. BU remembers the harsh criticism by the principal of the CPL in the first season when LIAT bungled the transportation assignment. What will it take?
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“BU perishes the thought there is a policy by the Barbados government to do nothing”. No change there then.
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David
When are Caribbean peoples going to take some concerted actions against these ‘effers’ in the WICB(C)?
Actions that will make sure we are no longer, never again, be subjected to this global humiliation!
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@Pacha
Are you referring to LIAT?
On 14 June 2015 at 16:05, Barbados Underground wrote:
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LIAT the WICB(C)……………….same thing!
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The problem with Caribbean governments – By By Felicia J. Persaud
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81 fuh 7! Any test team could beat this lot within 3 days, and do so consistently tooo!
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