BARBADOS TODAY – One shareholder government in the cash-strapped regional airline, LIAT, has no confidence that the regional private sector will be willing to pump any money into its operations.
And while Prime Minister of St Vincent and the Grenadines Dr Ralph Gonsalves does not see the selling of the airline’s shares making any difference to its operations, he believes it is time the regional carrier gets new shareholders.
His comments come amidst ongoing discussions between officials of majority shareholder Barbados and those of Antigua and Barbuda, as to how much the latter was willing to pay to acquire most of Barbados’ shares in the airline.
Stopping short of entirely dismissing the notion of a sale of shares from one government to the next, Gonsalves described the discussions between Bridgetown and St John’s as a “work in progress”, but told Barbados TODAY in a brief interview that what the airline needed now were significant injections of capital from new sources.
“Even if Barbados sells significant portion of its shares and Antigua gets the majority, Barbados will remain a significant player because it will still be on the board. The truth is this, what LIAT needs is a heavy dose of new equity capital. That is the issue as I see it, rather than the buying of shares from one country by another – to have more money inside of LIAT to help it to do the necessary and desirable restructuring to serve the public better and improve LIAT’s bottomline,” said Gonsalves.
Bridgetown currently has a 49 per cent stake in the island-hopping airline, while St John’s has a 34 per cent stake.
About three months ago it was made public that the Antigua government had put forward a proposal to purchase almost all of Barbados’ shares, and about a month later Prime Minister Mia Mottley confirmed this, while announcing that she had agreed to sell.
Officials are still tight-lipped on the details of the proposal and how it would impact on Barbados’ relationship with the carrier, but reports are that Antigua, where the airline is based, could acquire up to 47 per cent of Barbados’ shares, making it the largest shareholder government of the airline, which has been undergoing some restructuring.
The other shareholders are Dominica, St Vincent and the Grenadines and Grenada.
Gonsalves told Barbados TODAY that although the airline was desperately in need of funding, which should also come from destinations that benefit from its service, he questioned their willingness to fund an operation that is inefficient.
LIAT currently employs some 600 people and operates just over 490 flights per week to 15 destinations.
Gonsalves insisted that necessary funding of the struggling airline needs to come from a number of different sources, from all the existing shareholders, but more importantly, from “new shareholders”.
“I don’t see the private sector putting in money, although I am told that some of them want to, but I have been hearing that for quite a while. So other governments served by LIAT should put up some money,” insisted Gonsalves.
“You provide support for that route, but the critical issue there is what is the extent of that support which you are asking; is the support to subsidize any inefficiency of LIAT or support to finance an optimal level of efficiency?” he said.
Earlier this year officials urged Caribbean countries to put up US$5.4 million under a minimum revenue guarantee scheme to keep the airline afloat.
While existing shareholding governments have so far agreed to the proposed contribution, it is not immediately clear if Barbados will go through with its US$1.614 million that was being asked considering the pending sale of its majority shares.
It is also not yet known if Guyana, St Kitts and Nevis and St Lucia have agreed to the minimum revenue guarantee proposal for them to contribute US$292,282, US$389,691 and US$584,536, respectively.
Under the scheme St Vincent and the Grenadines would put up US$723,711, Grenada US$487,113 and Dominica US$347,938, figures calculated based on the number of weekly flights to the destinations.