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After previously supporting recommendations for liquidation of LIAT, governments of Barbados and St Vincent have agreed to transfer their shares in the company “for the grand sum of $1 each” per share to Antigua and Barbuda, as the airline moves forward with a reorganization plan that could see it back in the skies in 60 – 90 days.
However with a re-organisation plan that calls for the injection of US$40 million, and the airline up to its ears in debt, the surrendering of the shares marks the first step in a complex journey to the revival of the 66 year old airline.
The governments of Barbados and St Vincent, along with those of Antigua and Dominica are the major shareholders of LIAT, which is headquartered in Antigua. According to reports, transfer of the shares was agreed upon following a virtual shareholders meeting held last Monday, to discuss the fate of the Eastern Caribbean airline. Coming out of the meeting was also the agreement that the airline would sell its three aircrafts which are mortgaged to the Caribbean Development Bank (CDB), with the proceeds going towards servicing that loan. This is according to reports on an interview the Prime Minister of Antigua and Barbuda, Gaston Browne did with the Caribbean Media Corporation (CMC)
The mortgage is one of several loans that the airline has with that bank, while it also has a facility at the Antigua Commercial Bank, and has over US$100M in debt, some US$11M of which is owed to passengers from all across the Caribbean, including Guyana, and over US$80 million owed to staff.
Due to successive yearly losses, LIAT was particularly hard hit by effects that COVID-19 travel restrictions has had on the airline industry since early 2020, leaving the airline sinking in debt.
The shareholders have since been split on the fate of the airline, Prime Minister of Barbados, Mia Mottley and Prime Minister of St Vincent, Ralph Gonsalves have backed a liquidation recommendation by the airline’s Board of Directors, while Browne has been resolute in his call for the airline to continue.
Last weekend, Browne released “A Plan for the Re-organisation of LIAT” that proposes that the airline could return to viability if it cuts staff costs by US$1.85M and garners as much as US$3.33M in increased revenue from the introduction of a baggage fee.
Prime Minister of Dominica, Roosevelt Skerrit, has since given the nod to Browne’s reorganization plans.
The plan notes that the “COVID-19 pandemic presents the opportunity for shareholder governments to reorganize LIAT” given numerous past attempts that were made to do so, but were hampered by “uncooperative shareholders”.
In July 11, the Parliament of Antigua amended that country’s Companies Act to recognise re-organisation as a superior option to liquidation, reduced the bargaining powers of “uncooperative shareholders.” The changes to the Companies Act will allow for the appointment of an Administrator, who will be the sole representative of the LIAT estate.
“All decisions involving the affairs of LIAT would be taken exclusively by the administrator and not the directors or shareholders,” the plan noted.
“The main responsibility of the Administrator would be to reorganize the company, by cutting liabilities and realigning expenses to make the company solvent and restore viability,” it added. The administrator would also be examining the airline’s routes to determine profitability and examine the load factors to determine the most appropriate aircraft to be used. The plan would also see the administrator petitioning the courts for a stay against the airlines creditors. “Antigua and Barbuda will work along with the administrator to raise additional capital so that the new reorganised LIAT (1974) Limited would have the capacity to operate on a sustainable and profitable basis,” Browne said during his CMC interview.
