Given perennial losses worsened by the COVID-19 crisis, pan-Caribbean carrier LIAT (Antigua and Barbuda) (Antigua) will likely be closed during an upcoming shareholders vote.
“From all indication, LIAT will be liquidated,” Barbados Today quoted the Prime Minister of Antigua and Barbuda, Gaston Browne, as telling local Antiguan radio this week.
“COVID would have actually, let’s say, increased the losses exponentially, so whereas in all of 2019, LIAT made a loss of about XCD12 million Eastern Caribbean dollars (USD4.44 million), that was within the means of the shareholder governments to subsidize,” Browne said.
With most Caribbean island states having closed their respective borders to international commercial traffic, LIAT’s operations have been severely curtailed. To make matters worse, it has still had to make leasing payments on two of its five ATR42-600s and all five of its ATR72-600s.
“You would have found that since COVID, the planes have been grounded, they have to pay the lease payments and they are not getting any revenue,” he added.
LIAT’s shareholders include 11 Caribbean states of which Barbados, Antigua & Barbuda, Dominica, and St. Vincent & the Grenadines are the largest while the remainder - Guyana, Jamaica, St. Kitts & Nevis, Montserrat, St. Lucia, Trinidad & Tobago, and Grenada - holds minority stakes alongside various banks and labour unions.
Browne said that during an upcoming shareholders meeting, while a vote would have to be taken in favour of winding down the airline, a similar one - albeit focussing on establishing a new replacement carrier - would have to follow shortly after to ensure connectivity among the islands.
“A decision will have to be made to collapse it and then maybe the countries within the region will have to come together to form a new entity,” Browne added. “Back in 1974, when LIAT 1974 Ltd was collapsed, my understanding is that it took a day to start the operation of a new entity.”
“It may be a little more difficult to get it done within 24 hours, and I do understand that there are a number of stakeholders that we have to satisfy, especially creditors, and I believe that we could do a work out with the various creditors and to literally get some arrangement in which they can accept that we are not conveniently closing LIAT 1974 Ltd. The governments cannot go any further with it.”
Browne conceded that creditors, which include staff and lessors, among others, would have to accept that their claims will have to be reduced if a new carrier is to be borne.
“And these creditors, including the staff of LIAT, have to understand that there will have to be some level of cooperation to include possibly some cuts on their liabilities in order to facilitate the creation of a new, viable and sustainable entity,” he said.
“LIAT only owns three planes [ATR42-600s] and those planes are charged to the Caribbean Development Bank, so clearly they have a superior claim, and after they would have covered their claim, there will be hardly any assets available to liquidate severance and other liabilities to staff and other creditors, so there has to be a negotiated position.”
“The governments won’t be bandits and just walk away from the staff. They will have to pay some form of compassionate payments to assist them. But they have to understand that they are legally vulnerable and that they have to look at the bigger picture and to cooperate, not to become litigious and to prevent the creation of a new LIAT.”
