BASSETERRE, St. Kitts – AT a recent sitting of his country’s National Assembly in St. Vincent & The Grenadines, Prime Minister Dr. the Hon. Ralph Gonsalves vented his feelings on the public declarations made by some of his colleagues about LIAT’s financial situation.
In his opening statement, Gonsalves said that during the recently held 30th Inter-Sessional Meeting of the Conference of Heads of Government in St. Kitts, LIAT’s principal shareholder governments had provided information about the current financial condition and the immediate prospects for the survival or development of the airline in its existing framework.
Gonsalves noted that he requested of his colleagues not to make public what was discussed until some of the grave issues affecting the airline were resolved, but it fell on deaf ears.
“Unfortunately, some persons attending this conference did not heed my request, settled and agreed upon, not to address this matter publicly until the shareholders and other prospective participating governments had an opportunity to resolve further some thorny issues touching and concerning LIAT.
“Unhelpfully, some participants at the conference could not resist the temptation on leaving the conference to alarm the public with declarations such as: ‘LIAT will run out of cash to operate in 10 days; LIAT would close down by the end of March 2019 if reluctant shareholder governments do not cough up some money; ‘Even Ralph is fed up with LIAT’.
“One or two others who were not at the conference decided through hearsay and misinformation to spread further fear and alarm. One minister even dusted off an inciting and tired declaration that his government ‘is not going to be an ATM machine for LIAT’.”
The PM noted that history, in all its banality through infelicitous language, repeats itself first as tragedy and then as farce.
“The farcical outburst had a predictably damaging effect on LIAT in terms of reputational damage, uncertainty among the large public across the region and a rush by LIAT’s creditors for monies owed before the supposedly imminent arrival of doomsday,” Gonsalves elucidated.
He further explained that it was because of his appreciation of the likely adverse impact of unfiltered, unnecessarily alarmists and wrong pronouncements that he had urged restraint on public utterances for the time being on that most vital matter.
“Such pronouncements,” he lamented, “even prompted enquiries to LIAT’s management from the Federal Aviation Administration of the USA in respect of LIAT’s capacity to service its routes – Puerto Rico and the US Virgin Islands.
“In the wake of this unwanted and gratuitous damage to LIAT, its management was compelled to issue a statement distancing itself from the doomsday scenarios and providing assurances of continued services.”
Gonsalves however admitted that LIAT is facing grave challenges to its very survival and continuance. “But, as always, there are possible solutions at hand for LIAT and the travelling public,” he added.
The PM told Members of the House that notwithstanding the many reforms undertook by the airline, it is still tormented by “unresolved legacy issues”.
“Despite many worthwhile reforms within LIAT over the past 15 or so years, including its re-fleeting with 10 brand new ATR aircraft, the slimming down significantly of its workforce and alterations in management systems, LIAT is still racked by unresolved legacy issues relating to non-participation of LIAT’s financing by governments which countries are served by LIAT; pilots’ contract; inflexible work arrangements; unproductive scheduling arrangements; sub-optimal information technology systems; anti-developmental management practices; and too high taxes on the airline tickets.”
The bottom line, he stressed, is that in a small regional market LIAT’s revenues are way below its expenditure.
He noted that all of those issues and more were detailed in a recently concluded and reported Caribbean Development Bank’s Finance Consultant Studies on LIAT.
“The relevant reports layout the recommendations for a further reformed and restructured LIAT. The ongoing operational financial challenges and the resources required for the restructuring exercise are at the heart of LIAT’s current predicament in the context where most of the governments of countries served by LIAT are prepared metaphorically to drink the milk but are unwilling to help in minding and maintaining the cow,” Gonsalves added.
He explained that from among the options provided by the consultants, the four main shareholder governments – Barbados, Antigua & Barbuda, St. Vincent & The Grenadines and Dominica – had adopted what is called the Restructuring Option.
“The consultants advised that US$152M in funding was required to restructure LIAT as follows: Conversion of Debt to Equity - and this debt is mainly CDB by the existing shareholders - US$66.8M; Additional Cash Investments - other governments - US$39M; Subsidy by the major shareholders for 2018 - US$13M; Subsidy for 2019 to 2023 - all shareholders - US$32.8M; the total required for five years - US$151.6M.
"The shareholder governments in their earlier agreed proportions with the CDB began servicing the CDB debt for the re-fleeting exercise. The portion shouldered by St. Vincent & The Grenadines is US$5M.”
