Response from governments and workers to LIAT’s proposals not favourable

The governments which were asked to make Minimum Revenue Guarantees (MRGs) or emergency cash input to LIAT have not responded favourably, except for Grenada.

The regional airline has also hit another hurdle as workers have not agreed to pay cuts suggested in an attempt to restructure the struggling airline.

March 15 was the deadline given to 11 regional territories to respond to a request from LIAT for MRGs and earlier this month, the regional airline also asked eight countries to contribute to a total of US$5.4 million to an emergency fund, with the aim of keeping its planes in the sky.

But speaking on Friday, Prime Minister Dr Ralph Gonsalves, who is the chairman of the shareholder governments of LIAT said that the response to the requests has not been favourable.

Gonsalves said that other than the shareholder governments, only Grenada has said they will come aboard to provide emergency funding and no other country. He said that while everybody is saying they agree theoretically, there is no movement.

It was also announced this week that management and unions representing the airline’s workers have served notice that a salary cut is not an option although the unions seemed willing to accept pay cuts during an initial meeting.

“I don’t think the workers fully appreciate what is going to happen,” Gonsalves stated.

He said that the Caribbean Development Bank (CDB) is involved and there are three options: for the private sector to take over LIAT, close down LIAT and start a new business or restructure.

“…[Restructure] is a pie in the sky. Private sector, they may come with the government involved but for them to take it over, they have been that road before and they back away like soldier crab.

“With the restructuring, everybody had to bear some burden including the workers and not an undue burden, but if they think you can continue as usual…”, Gonsalves said in an interview on We FM last week.

Giving some numbers, Gonsalves noted that at the moment, LIAT has 10 planes; SVG has 52 flights per week, Barbados 116 flights and Antigua 69 flights. St Lucia has flights with an average load factor of 46 per cent while Trinidad has a 38 per cent load factor.

He said that these load factors mean that without MRGs, the St Lucia and Trinidad routes might be dropped because if the shareholder governments have to pay for those routes it might be better to engage other aircraft to fly them.

It was added also that with fewer routes, three of the 10 planes that LIAT owns can be sold and that will reduce the debt on shareholder governments like Barbados and Antigua.

“People don’t understand the modern period of regional aviation. I am not fed up with LIAT. I am sticking there with LIAT, but it has to be a substantially restructured LIAT and we have restructured in the past and there is no problem in principal if you have to do a small subsidy in LIAT, but clearly, we alone can’t be bearing the burden,” said Gonsalves.

The major shareholders of LIAT are Barbados, SVG, Antigua and Barbuda and Dominica and there are plans to encourage St Kitts Nevis, Grenada, St Lucia and Guyana to become shareholders.

The Prime Minister said the LIAT issue is taking up a lot of his time, but he has to press on.

“Some of the people cursing LIAT have no solution,” he said.

On Tuesday, president of the Leeward Islands Airline Pilots Association (LIAPA), Carl Burke told the media that his members are very reluctant to accept a salary cut while Prime Minister of St Lucia Allen Chastanet said he has not entirely dismissed the MRGs suggestion for non-profitable routes, but much more detail about that suggestion has to be provided before he makes a final decision.