BRIDGETOWN (CMC) — Caribbean governments are looking towards securing financial assistance from the European Investment Bank (EIB) for the regional transportation sector amid concerns that shareholder governments may be forced to close down the cash-strapped regional airline, LIAT.

Prime Minister Mia Mottley, whose country is one of the four major shareholders of the Antigua-based airline, has confirmed that she has started discussions with the EIB on support for the region’s “transportation sector”.

While she did not name the struggling airline by name, she told reporters that during her recent visit to Canada and the United States, she met with the EIB Senior Vice-President Alexander Stubb, adding that the European bank has expressed a willingness to assist with regional projects.

“The EIB doesn’t only lend to the government, it also lends to private companies like the Barbados Light and Power in the past and it has also engaged here with not just national projects but also regional projects.

“And as the lead prime minister for the single market and single economy, I also had to engage in discussions with them on opportunities within the transport sector in particular, with respect to the EIB and its role in the region,” Mottley said.

Her announcement comes in the wake of a statement by St. Vincent and the Grenadines Prime Minister Ralph Gonsalves, earlier this month, that the regional carrier may be forced to close its operations after Caribbean governments appear reluctant to provide the necessary cash injection needed to keep the airline flying.

Speaking on a Grenada Broadcasting Network (GBN) programme, Gonsalves said only Grenada so far had responded positively to the call for US$5.4 million to help the airline deal with its current financial problems.

“Prime Minister (Keith) Mitchell has put in approximately one million dollars towards emergency funding because he is interested in seeing LIAT remain in the sky,” Gonsalves said, hinting that LIAT, which has a complement of 10 aircraft will soon have to be made on the way forward.

Three of the aircraft are owned by the Barbados-based Caribbean Development Bank (CDB) that provided the funds to the regional government shareholders to purchase them and the seven others are leased.

“We probably will have to ask the CDB to sell those three aircraft and operate seven of them and then get another smaller airline, like One Caribbean, to fly between here and St Lucia, rather than get LIAT to fly on one of the routes which is going to Trinidad which is not economical.

“The governments have not been responding so the shareholders are reaching a critical point now and if you ask me, what is likely to happen … there will be a transitional restructuring leading to a closure of LIAT,” Gonsalves told the GBN programme, adding that a new airline would then have to be the next option for the region if LIAT is closed.

When asked to share more information about the initial meetings with the EIB on transportation in the region, Mottley declined, but promised to do so in due course, adding that “running a government means going where the policy takes us, where the data takes us and where the information is.

“The discussions with the EIB are preliminary but by the same token there are very few entities that the region, as a whole, can borrow from with respect to regional projects. The Europeans, in spite of everything else, have remained engaged with us, they understand the dynamics of a single market because they themselves have literally managed a single market and single economy for decades. So, when we are ready to speak on that, rest assured we will be,” Mottley said.

Apart from Barbados, the other shareholder governments of LIAT are St. Vincent and the Grenadines, Dominica and Antigua and Barbuda.

Earlier this month, LIAT said despite pilots and its workers across all its 15 destinations agreeing to a 6 per cent salary cut, the airline is still facing a severe financial problem and may require additional salary cuts from its employees.

According to an internal document seen by the Caribbean Media Corporation (CMC), following a shareholders’ meeting in St. Vincent and the Grenadines, the regional airline said that the 6 per cent cut did not go far enough.

“The shareholders are of the view that this proposal did not go far enough and that the six per cent cut did not meet the immediate cost reduction objectives of the company at this time.”

The document said that the shareholders are “considering additional measures to address the financial challenges of the airline and that it would continue to update staff on discussions and the proposed measures that will be agreed upon”.

13 replies on “Eastern Caribbean gov’ts rushing to save LIAT”

  1. It is just simple economics and the basics of proper financial planning/management, governments should not be involved in the running of airlines. The best best to keep liat in business is to sell it to a private entity.

    What are we holding on to here? Is it history or tradition? I love Liat more than those international carriers mostly because it belongs to us and knowing that it is the first airline most islanders in the soutern and eastern Caribbean traveled on. However, l think the best way to keep our beloved Liat in business it’s best to have it privatised.

  2. C. ben-David says:

    Why is LIAT such a sacred cow?

    Thousands of private companies around the world go bankrupt every day while thousands of new ones rise from their ashes.

    The fear mongers on Facebook keep crying that we could never fly around the region without LIAT which is nonsense since there would be many private carriers, small and large, that would quickly take up the slack.

    The privatization of airlines has been taking place around the world for decades with much success as money losing government airlines have been bought by the private sector and quickly began making a profit.

    Most of our Caribbean governments couldn’t even successfully run a mauby parlour, judging from the way they are running their countries into the ground with growing debts and failed projects.

    Why would we expect four of them to ever be able to successfully run a complicated business like an airline?

    The LIAT donkey is dead; dismount.

      1. C. ben-David says:

        Caribbean Airlines, SVG Air, and Mustique Airways to name only three that already service the immediate region.

  3. The Caribbean borrowers, money in hand, to their LIAT lenders as they leave the room, “Au revoir.”

    Of LIAT, David Copperfield would say, “That’s more than I can do.” Churchill would say it’s “a riddle wrapped in a mystery inside an enigma.”

    So, LIAT is now “regional project”? At least that’s the way prime minister Mottley is selling it – to you.

    Finally, in an earlier piece, elsewhere, prime minister Gonsalves said that, “the closure of LIAT is fast approaching.” Then, “fast” is the biblical equivalent of “near” in, “the second coming is near.” The reality is, the death of LIAT would be the slowest and longest murder crime in Caribbean history.

    No, finally, do I have this right? The Caribbean governments are going to the EIB to borrow money for a regional project because they can find only one glutton for punishment who is willing to chip in … where they wouldn’t. What are they saying to the EIB? That we can muster only one fool among us, so here we are, the smarter ones, asking you to do what we are not willing to do? We need you to chip in our share.

    If a boat is a hole in the water into which you pour money, what is LIAT? And whose money is getting poured?

    Churchill would sure have been right.

    CORRECTION: I said that the only prime minister who is willing to chip in is a glutton for punishment. Well, I’m wrong. He isn’t. He is chipping in free moolah. What “punishment?”

  4. BOY WHAT A SAGA ……..THEY WOULD BE FOOLISH TO LOAN MONEY …..HOW CAN ONE EXPECT CHANGE BY CONTINUING SAME COARSE OF ACTION ……YOU DONT NEED A MASTERS IN BUSINESS TO FIGURE THIS OUT AND OF YES THE “CONFLICT OF INTEREST ” WITHOUT PROPER OVERSIGHT.

  5. Anyone who has lived on these “shareholder islands” and has watched the history of Liat, know fully well that it does not matter who manages Liat. It does not matter what planes Liat flys, nor does it matter how much money the world throws at Liat, it will always be a financially-troubled airline.
    Those of us that have any mental capacity at all, will realize that the OWNERS of this airline see it as nothing but a cash-cow to be exploited to the fullest! If the staff worked for free, the airline would still be in trouble.
    When the Prime Minister of SVG gets involved with anything it turns into a winning Capitalist enterprise for himself and those he represents, and a losing Socialist enterprise for the working-people, only this time it is unnecessary to hand-out some small-stuff crumbs to the poor for votes because Liat is on the one hand private for thier profits and socialist-governmental for the loses…like an exploited gang-bang whore for the shareholder governments, as we the people are forced to watch, …and pay for it!

  6. I have read and re-read this piece several times and it makes less sense to me on each reading:

    1. Are all the four major owners on board on borrowing money from European Investment Bank?

    2. Would a $US 5.4 loan be enough to keep LIAT flying for more than another year or two if that?

    3. Won’t this loan still result on a big downsizing of the airline to servicing only the four shareholders?

    4. What are the total LIAT debts and who will pay for them once the airline takes its last breath?

    5. What are the contingency plans that have been put in place to guarantee as smooth an exit of LIAT as possible for the flying public?

    6. Will a forensic audit be held to determine why LIAT has nearly always been a money-losing operation?

    1. C Ben your questions should be obvious and automatic to any organisation that wants to exist with any level of success. Since those in charge of Liat’s financing avoid such questions we should all ask ourselves: “What is the real purpose of Liat?” I am sure that you, Patrick and everyone leaving comments on this article have already been, at least on a sub-conscious level, been asking yourselves this question all these years.
      In my opinion Liat has a purpose of soaking as much money from the public as possible. We all know that the shareholder governments have not lost but gained a fortune in taxes from inter-Caribbean travel, mainly Liat and other heavily-taxed airlines.The guy in charge has miscalculated how many people have how much money to fly Liat or any other HEAVILY-TAXED airline. The general public cannot afford to fly; only the rich and the GOVERNMENTS can afford to fly these airlines on a regular basis.

      Maybe one purpose of is to keep the flights so expensive to insure that no one leaves SVG in the mass-exodus, brain-drain that has plagued the country for decades, leaving primarily only the doltish and lazy on the island to keep supporting losing economics, (this is also obviously the case in Venezuela).

      Maybe another purpose is to get the airline in such heavy debt and then pull a “master stroke” and eliminate the airline leaving the public to (unwittingly-silently) be forced to pay-off the debt in decades of taxes.

      I am sure that in time the truth will reveal itself.

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