“Put your money where your mouth is . . . . Everybody wants to talk about LIAT, but a number of these persons don’t want to have an authoritative position to speak about it. Being a chief executive officer of a company or the prime minister of a country which is not a shareholder doesn’t give you the right to talk authoritatively about LIAT,”
St. Vincent and the Grenadines PM Dr. Ralph Gonsalves in the Nation’s No place for buccaneers in LIAT says PM
Is the reality that LIAT’s failure is not about leadership, financing or equipment? Could it be that 70 years of Caribbean commercial aviation has revealed a basic truth that no Carib-based airline could ever be profitable?
Here is the fourth letter to LIAT shareholders from Dominica hotelier Gregor Nassief, urging PM Gonsalves to step aside as chairman of the LIAT shareholder’s committee.
Honourable Dr. Ralph Gonsalves of St. Vincent and the Grenadines
LIAT (1974) LTD
V.C. Bird International Airport
P O Box 819
Dear Prime Minister Gonsalves:
Re: Run it like a business before it goes out of business
On the televised program Time to Face the Facts on Sunday, February 23rd, I appealed to you to step aside as Chairman of the Shareholder’s committee of LIAT. As mentioned on the program, given the respect and admiration I have for you, particularly on your stance and leadership on issues such as reparations and the cholera outbreak in Haiti, it was personally difficult for me to do this. But it is necessary.
LIAT has moved from an operational meltdown in the Summer of 2013 to a financial meltdown a mere 7 months later. LIAT drains our treasuries, operates inefficiently and stifles competition. The source of LIAT’s problem is its financial unsustainability and as with everything else at LIAT, no one is accountable. As Chairman of the Shareholder’s committee, the buck stops with you.
LIAT needs to fight the battle of its life to transform itself to be financially viable and sustainable. But you believe, and have stated so publicly, that LIAT can never be profitable. This battle, therefore, needs a different general.
LIAT has lost ec$120m in the last four years. Last month, LIAT could not pay both the lease on its aircraft as well as its payroll. So it chose one and delayed the other. A leased ATR gives 36% more seat capacity than its closest Dash 8 equivalent but is double the (lease) expense. In 2015, repayments will begin on LIAT’s recent loan of us$65m to purchase new aircraft. So monthly cash outflows go up even more.
And the new inflows to cover this? Inter-island tourism is down 60% in 7 years and LIAT’s load factor is running at about 55%. The fantasy (aka “business plan”) is that the load factor will go up to 75%. The fantasy is also that LIAT will fly its way out of losses by expanding to new destinations – Jamaica, Haiti, Aruba, Panama, and eventually to cities in North and South America. Continue reading