Bankrupt regional carrier LIAT owes its staff some $94 million in severance and holiday payment, which the chair of its shareholder governments, Prime Minister Ralph Gonsalves, said it is unable to pay.

Gonsalves, speaking on WE FM on Sunday, gave an insight into the financial affairs of the airline, one day after chairing a meeting of the shareholder governments.

During Saturday’s talks, the shareholder governments — Antigua and Barbuda, Dominica and St. Vincent and the Grenadines — decided to liquidate the airline, which has had on-going financial woes.

He said that at Saturday’s meeting, he received a report from the board of directors and the management on the critical financial position of the airline.

“I got a recommendation from the board of directors, particularly on the issue concerning winding up or liquidation and taking the decision for a general meeting of all the ordinary shareholders of the company to consider a resolution for the winding up, dissolution of the company,” Gonsalves said.

LIAT’s scheduled passenger service has been suspended since March as a result of COVID-19.

Gonsalves said the airline was having problems since 2017, but the hurricanes that year put the airline “in a tailspin and into 2018.

“Remember we lost millions of dollars because you couldn’t go to several countries…. So the schedule was gravely disrupted. We lost a lot of money.”

He said that 2017 and 2018 were “very bad years for the airline”.

“In  2019, it lost about EC$14 million. Well, that was recovery of sorts from the hole in 2017 and 2018. And then COVID hits in 2020 and over the period with COVID, we have lost about $35 million. It’s a big sum of money.”

He said that the management sent their salaries for May, June, July and overdue payroll liabilities.

“Because even though they laid off about 500 workers, they kept on a staff of about 168 across the network. Then, for maintenance of the aircraft, insurance, repatriation of staff and health insurance coverage and rental of office equipment, utilities, that number comes up to about EC$10.8 million. And then you have about –their paid booking at May 2020, LIAT had paid bookings of US$4.3 million outstanding.

“Now, these are things which the liquidator would have to deal with. But severance payment in total, for all the workers, as per the existing collective agreements, which is not necessarily what the law of Antigua would specify but I am taking the law of Antigua in relation to insolvency, the number may be smaller, but if you are dealing with just the existing collective agreements, you’re looking at 83.9 million in severance payment and there are people who have vacation pay and for all the countries, it’s another $10 million in vacation pay, so you are talking about $93.9, call it $94 million,” Gonsalves said.

He said LIAT is “insolvent, LIAT doesn’t have any assets to pay anybody anything.

“You see the problem. Now, notice will have to be given to the creditors also so that they can come to the meeting when the meeting is held with the requisite notification. But there are pre-liquidation costs, not dealing with the severance payment because there are some people whose severance is already due, because of the length of time since they have been laid off. They are constructively taken as though they are severed.”

The prime minister said that the Caribbean Development Bank owns three of the aircraft that LIAT operates and has a priority charge on them.

“And then the rest of the planes are leased and in due course they would have to send them back, unless, of course, a new entity which arises leases them from the lessors,” Gonsalves said.

LIAT has 10 aircraft in its fleet, split equally among 48-seater ATR 42-600 and 68-seater ATR 72-600.

The airline services 15 destinations, from Puerto Rico to Guyana.                     

12 replies on “LIAT owes $94m to its workers”

  1. Urlan Alexander says:

    Alas! Covid is being blame for gross incompetency. As the chairman among the shareholders with responsibility for LIAT, Ralph has failed miserably and his failure with LIAT goes way back before Covid-19.

    1. Islandflyer says:

      Without a doubt. And his further comment during the program is showing his naked ambition… “he has 2 airlines” – at Argyle

  2. What we should all understand is that LIAT has been trading or not trading whilst it is insolvent and incurring huge losses. By law Directors are personally responsible for losses made whilst trading whilst knowing to be insolvent. The houses and property of the directors, past and present, should be valued and listed asap to ensure they do not purport to sell their assets.

    Ralph was overseeing LIAT as chairman of the shareholders,, if things have gone this badly wrong he must be brought to task. He has been warning that the company was insolvent for years so as a lawyer he was aware of the consequences of trading whilst insolvent.

    If the shareholders insisted that the Directors continue trading whilst the company was insolvent then the shareholders are responsible.

    One thing for sure the employees should group together get a good lawyer and sue, sue, sue.

    After writing the above I notice the following

    Friday, January 10, 2020 (CMC) – LIAT, named a new Board of Directors

    The new Board, was announced, following the airline’s meeting, here, on Monday Jan 6 2020, included former Barbados civil servant, Juanita Thorington Powlett; businessman, Mark Maloney; Michael Holder; Robert Riley; Carolyn Tonge; Lennox Weston; Sir Robin Yearwood; and banker, Isaac Solomon.
    The new Board Chairman, former Barbados Prime Minister, Owen Arthur.

    LIAT announced, “The new chairman has been tasked, by the board, to undertake a special assignment, to meet with regional prime ministers to discuss sustainability of the airline,” LIAT said in a statement, adding “this assignment will be supported by other directors and the management team of the airline”.

    I just hope the new chairman and his board of directors understand the implications of them trading the company whilst insolvent during the last six months, they may be responsible for some if not all the debt during that period. The previous directors are not off the hook either they have been trading an insolvent company for years.

    Arthur sorry old bean, seems you have been sold a pup by your friend in a way that is actually an unfriendly act. You may be in line to lose your house, get yourself a good lawyer.

  3. There is a thing about gross incompetence, eventually we all get to see it when things goes belly up! The new proposal it would appear is to retreat and cover up, rather than admit incompetence, then go back and do the same!

    We would not ask a plumber to run the bank why then did they ask this smooth talking politician to run this Airline? …………………… Horses for courses!

  4. Luann A Hadaway says:

    Any monies that is being considered for LIAT should be used to pay our local workers their severance/gratuity, vacation pay , salaries and any other monies that they are entitled to.

    And I suggest that these monies be deducted locally and not sent to Antigua with the expectation that our workers will eventually be compensated. It may not happen.

  5. These governments all have to blame themselves for incompetence, Liat has been insolvent all that time and nobody said a word. A new Board of directors just in January and nothing said. After more than 50 plus years in business and not one plane belongs to them, the height of incompetence and poor, poor management. Even thought they had bought a plane every decade they wud have some assets. It’s a shame the only people who are losing are the employees who are at the bottom not the top.

  6. Luann the workers should get every cent they are owed if their union goes about it the right way and gets skilled international lawyers to take on the case of trading whilst insolvent.

    This is not hit or miss guesswork this is based on legal fact.

  7. Insolvency trading is not necessarily an action against the liquidator its against the directors and shareholders.

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