Tomas Chlumecky: LIAT should tell the truth

Editor’s Note: This article was written prior to the recent announcement that David Evans had been hired as LIAT’s new CEO. Will the change at the top make a difference? The rot goes deep, as this article by Tomas Chlumecky shows…

LIAT late

As LIAT continues to drain tax payers money, is it not time for the tax payers to ask for action and accountability from their politicians?

As an Airline Consultant, I thought I have seen it all, but LIAT is a very special case indeed. Experience shows that companies in decline MUST replace some of the people responsible for the decline, these people lead the company to its current position and are incapable of the mind set needed to make fundamental changes to the strategy they so blindly believed in that created the crisis in the first place. They may not see it, but they block any real changes because they are bent on defending the dying cause, therefore they need to go!

When will the Board realize that the Chairman of LIAT, Dr. Jean Holder and once again Acting-CEO and CFO Mrs. Julie Reifer-Jones are failed leaders that have led LIAT to where it is today? Any reasonable Board by now would have requested their resignation.

Recently LIAT blames the “summer meltdown” on its inability to sell its DHC-8 aircraft because they do not have the records for the aircraft up to date! One year after ordering the ATR’s and knowing full well they needed to sell them with records up to date, just the fact the records are not up to date is NOT acceptable. If they flew with records not up to date the then ECCCA needs to step in investigate. Just horrible management.

Next, the people of the EC are being told the new ATR’s are more economical and that is why LIAT went out to buy and lease 12 ATR’s. This is non-sense. The 8 ATR-72’s will cost about $US1.4 million lease payments per month! The 4 ATR-42’s being purchased cost $US 74 million at list price, so what LIAT did was substantially increase it lease obligations and debt at a time it has little money, pays salaries late and cannot even keep its maintenance records up to date.

These financing costs will add significant costs to operating costs to its fleet, well beyond the DHC-8 fleet, CASM (cost per available seat miles will go up) way up. The argument that the ATR’s are more efficient is wrong. I have compared block fuel burns per trip for each aircraft and found that LIAT is NOT telling the truth to the taxpayers of the EC :

  • ATR-42-600 (48 passenger seats) burns 1,246 lbs (pounds) of fuel on a 200nm (nautical mile) trip and 1,727 lbs on a 300nm trip.
  • ATR-72-600 (68 passenger seats) burns 1,363 lbs on a 200nm trip and 1,894 lbs on 300nm trip.
  • Yet the “old” DHC-8-300 (50 passenger seats) burns 1,214 lbs on a 200nm trip and 1,678 lbs on a 300nm trip.
  • The speeds of the 3 aircraft are very close DHC-8-300 max speed is 327 miler per hour (mph), while the ATR-72-600 is 316 mph and the ATR-42-600 is 345 mph, no major difference.
  • The DHC-8-300 is on a per trip basis more fuel efficient because it uses the lower powered engines (PW125) while the ATR’s use the PW127 engines with more more power and thus more fuel burn.

Someone needs to STOP the lies coming from LIAT’s Management. The airline went out and got 12 brand new aircraft worth $US 256 million when it did not need to. When you don’t have the money, you make do with what you have. Airlines are no different. They say the DHC-8-300 aircraft were too old. In fact they are only 20 years old which is fine for aircraft. Air Canada uses 64 of the same aircraft as LIAT and their average age is 25 years old. They will not be replaced anytime soon, so why the lies about fuel efficiency and old aircraft? Who gained from the ATR deal? It sure was not LIAT or the taxpayers!

With the the added cost of lease payments, financing charges, training costs, new spares inventory the savings on maintenance costs, the new ATR’s will not come close to offsetting the added costs. Therefore the ATR will cost MORE than the DHC-8-300! So LIAT’s CASM (cost per available seat mile) will increase, thereby increasing breakeven passenger loads and making a bad situation even worst.

Too many people are talking about things they do not understand – and the LIAT babble is mostly just propaganda for those at the top who themselves have NO idea what they are doing.

Why was it so important to change the fleet under Capt. Ian Brunton when there were so many other areas LIAT needed to change first; like customer service, reliability, maintenance, revenue management, cost control, employee reductions, addressing the 39 “social” routes. Something is not right about any of this. It smells of absolute mismanagement and may at some point require investigation for possible wrong doing.

Lastly, 850 employees for 12 aircraft, is ridiculous! 71 people per aircraft? Today Westjet Airlines in Canada has 8,000 employees for 113 aircraft (105 B737’s and 8 DHC-8-Q400), that is 71 employees per aircraft as well! That is too many people on the payroll for the business LIAT does. There is no need to have more than 50 employees per ATR, therefore 600 employees is sufficient. 250 LIAT employees need to go if this airline is ever to be self sufficient.

The current leadership is killing LIAT; making so many mistakes, yet covering up the truth and hoping they can deceive those who know little of aviation. I only want to see a vibrant LIAT with a future, and I am sure this is what the taxpayers want as well. It’s time for the politicians to do what they are paid to do, which is to serve the interest of the people.

Tomas Chlumecky

5 Comments

Filed under Aviation, Barbados, Barbados Tourism

5 responses to “Tomas Chlumecky: LIAT should tell the truth

  1. Party Animal

    Politicians / Governments don’t know how to run any type of business.
    LIAT needs to be in private hands. Political appointed employees are only there for the ride.

  2. Just as with any National Airline in the region, they are all loss making entities. Run with government and political interests at the expense of the taxpayer.

    Praise be to the Almighty…we in Jamaica were blessed to unload the $US100 million annual loss making Air Jamaica, a huge drain on the public purse, onto the ignorant Trinis. But that was all political and not grounded in economics.

    BWIA became CAL and that is being run by the same idiots, with the same results. LIAT in the same hole

    The common theme…government owned and operated. I say sell them all. We need to rid the region of nationalized airlines! There is no benefit to having them other than a “feel good” sentiment, which amounts to nothing but more financial hardship in the end.

    K Fiennes

  3. D Oracle

    Following money is the best way to figure out what the hell is going on…for starters, a US$256 M sale will have loads of room to pay a finder’s fee, consultant’s fee and any other concocted fee to pay LIAT officials in a country/bank ac count of their choice. Then there’s the ongoing fees payable for the maintenance/training of the new aircraft. Yes, the management of LIAT may well be killing the airline but that’s not management’s point…..the fattening of their wallets is.

  4. Aviation Doctor

    It has been 100 days since the new CEO has taken over at LIAT and we have seen NO real changes, it is business as usual at LIAT, which means burning tax payers money, very disappointing, at this time a grade of C at best.
    The first 100 days of any CEO are very important to lay out what it is you will do, to let people know where you are heading and what changes are needed. By now Mr. Evans should have a good understanding of what lies ahead, the problems, opportunities, possible approaches and likely obstacles. The quick screen should be done, all problems reduced to simple elements and now zero in on key metrics and detailed analysis.
    By now, LIAT’s management, Board, Chairman should have gone from the denial phse and through the resistance phase and be at the acceptance phase, and be on board for on going cost reductions to turn the company around. The CEO needs to be creating excitement and enthusiasm in getting all on board for a brighter future.
    IF after 100 days it is not there, then he has lost his momentum, and employees will loose faith in any real change, but this time its different, the EC has no money, economic stagnation for 6 years and no one is realizing the fact the EC has lost its attractiveness as a tourist destination, competition is now not only Mexico, Cuba, Dominican Republic, but also new destinations Thailand, Colombia, Costa Rica, Brazil and the EC continues to loose its place in the global tourist market.
    The CEO should be talking often, don’t worry about repetition, communicate a sense of urgency and need for action and make expectations and accountability clear, employees need to understand specifics of what you want and how you will judge them.
    Let employees know the savings are for investment and growth, under promise and over deliver, say what you are going to do after you have done it !
    It is disheartening that once again a CEO is in place that will follow the course of the Chairman and Board, change little, and continue the denial of what IS going to happen, bankruptcy, the governments have no money and the international community needs to look at how much the EC wastes keeping LIAT going, it is doomed, it needed a tough, leader to change things, someone action oriented, enthusiastic and intellectual integrity to get things done. Its what Dr. Holder wanted, someone who won’t rock the boat, won’t push for the changes need:
    1. reduce work force from 850+ to 450
    2. money loosing routes are dis-continued, either smaller 3rd party aircraft fly them, or the individual government subsidizes looses directly.
    3. push for reduction in taxes, 40% to 48% of ticket price is not acceptable
    4. change management, bring in outsiders who know their business, in the Caribbean few do, its why there has NEVER been an airline in the Caribbean that has been profitable for any extended period, all survive on government aid that are in business (Bahamasair, Cayman Airways, Winair, LIAT, CAL), no one has an idea how to make money and be self sustaining in the airline industry

    Its now matter of WHEN LIAT will bankrupt not IF and it will be very hard on the EC economy, maybe one day the ‘secret’ books to LIAT financial aid will be un-covered and people will see what mismanaged operation it is and has been for years.

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