LIAT’s Impending Closure
Chairman of the LIAT Shareholders Government Group of Countries and Prime Minister of St. Vincent & the Grenadines, Dr Ralph Gonsalves has expressed fears that the closure of the regional island hopping carrier, LIAT is imminent as most of the countries which use the carrier services are not responding favourably to the airline’s request for US$5.4 million to ensure its survival.
Gonsalves made the statement as a guest on a popular current affairs programme in St. George’s run by the Grenada Broadcasting Network (GBN).
The Vincentian leader told the programme host that Grenada is the only government that acceded to LIAT’s request by pumping approximately $1 million into it.
“…Prime Minister Mitchell has put in approximately 1 million dollars EC towards emergency funding because he is interested in seeing LIAT remain in the sky”, he said.
According to Dr. Gonsalves, due to the lack of financial input from the other shareholding countries, LIAT’s closure is imminent.
He said that LIAT has a compliment of 10 aircraft – seven are leased and three are owned by the Barbados-based Caribbean Development Bank (CDB) due to monies borrowed and a decision will soon have to be made on the way forward.
“…We probably will have to ask the CDB to sell those three aircrafts and operate seven of them and then get other 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 which is not economical to cut it”, he remarked.
“… 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,” he said.
Dr. Gonsalves pointed out that a new airline would then have to be the next option for the region if LIAT is closed.
However, he said that there will be consequences in terms of job losses.
Gonsalves said: “If you sell the three aircraft which are owned by the CDB, immediately that’s 33 pilots who would have to go. Then other workers will have to go, flight attendants etcetera, etcetera, because over 7 million US is required in some immediate savings, 2.53 million US required from the workers but you ain’t getting the number near to that.
“We wanted a 10% cut across the board, but we not getting that and the pilots have agreed to a 6% cut on the basic pay, that ain’t going to do anything much, and the question of the agreement…the legacy agreement, they don’t want to have new contracts.
“…So, what you probably will have to do is to start a new airline and you hire people on specific contract but I can’t guarantee that there would not be disruptions.
Dr. Gonsalves disclosed that the Leasers of seven of the LIAT planes in far away some places like the United Arab Emirates (UAE) are prepared to give cuts of between 17 and 20 percent and other stakeholders are prepared to do cuts in order to save the regional carrier.
“…I don’t think the employees fully grasp what is at hand”, he said.
Two years ago, Gonsalves said that CARICOM member states collaborated with the CDB to have a consultation on LIAT.
He said the problems facing the airline were diagnosed and three options were put forward as measures to be taken to resolve the issue.
According to Gonsalves, the first option was a proposed restructuring of the airline where “countries served by LIAT have to come into the mix and the workers themselves have to take a salary cut and the other stakeholders have to chip in.”
The second option, he indicated was to give the airline to the private sector completely, while the third option was to close it down and start afresh.
“If you even close it down and I fear that that is an option which is becoming more and more realistic, but if you close it, you have to manage in the transitional period and we need to have resources…”, he said.