The Mia Mottley Administration is being asked to share part of the financial burden in a new rescue plan to reorganize cash-starved LIAT, which requires an initial reinvestment of EC$108 million.

The reorganization plan, which was made public by Prime Minister Gaston Browne on Saturday, was prepared by the Antigua and Barbuda government for consideration by Barbados and the other major LIAT shareholders, St Vincent and the Grenadines and Dominica.

A meeting has been set for 5 p.m. on Monday, where Browne is expected to make his pitch to the other shareholders.

A previously scheduled meeting, which Browne saw as a last-ditch effort to sell his government’s plan, had to be postponed due to the unavailability of Prime Minister Mottley.

Antigua, which is strongly resisting a proposal by Barbados and St Vincent to liquidate the regional air carrier, said in the new plan that it is prepared to underwrite up to 50 per cent of the required capitalization.

“The new capital invested during reorganization will be protected, in that it will rank in priority above all other creditors in the unlikely event of liquidation,” stated the plan signed by Prime Minister Browne.

The proposal calls for the remaining $54 million to be shared by other private and public sector entities, including existing shareholder governments.

However, the Antigua plan said if the existing shareholder governments are not interested in investing in the reorganized LIAT, they will be requested to surrender their shares for $1.00, which it claims is a superior offer to what they would get in liquidation.

If the St Johns-birthed option gets the required support, LIAT will see a shift to some private sector ownership.

“As far as practicable, the private sector should be encouraged to participate in the recapitalization and directorship of LIAT. Private sector ownership and participation is desirable and would bring a greater focus on commercial operations of LIAT and profitability,” the plan reads.

The Antigua proposal said the aspiration for LIAT, after it returns to good financial health, is to offer jet services out of Miami on a wet lease of two jet aircraft, should necessary feasibility studies confirm that such services would be profitable.

It suggests that the jet service could also open up new markets that connects the Caribbean and Latin America to include Panama to facilitate inter-regional movement of people and goods.

“A double travel and logistics hub will be operated with Antigua in the North and Barbados in the South. All routes flown will be based on profitability and unprofitable routes will only be flown if supported by an MRG,” revealed the plan.

The proposal condemns LIAT’s work culture, which it contends has not been exemplary, thus leading to poor service quality and reputational damage.

“While this culture is not practiced by every employee of the airline, it is known to be prevalent among many. Employees who have records of high absenteeism and poor work ethics will not be rehired.”

“Further, work ethic, performance related pay and other programs will be introduced, in rebuilding a healthy organizational culture, based on good service quality and efficiency.”

The plan also contains a strong warning for stakeholder governments who are pushing for liquidation of the regional airline.

“If shareholders pursue the piecemeal liquidation of LIAT and fail to work out a plan with creditors and employees, the liquidation will not only be disorderly, but shareholding governments may be confronted with litigations, totalling hundreds of millions of dollars and tens of millions in legal fees,” it cautioned.

The rehabilitation provisions in the Companies Act of Antigua and Barbuda allows for the appointment of an Administrator, who will be the sole representative of the LIAT estate. All decisions involving the affairs of LIAT would be taken exclusively by the administrator and not the directors, or shareholders.

The main responsibility of the Administrator would be to reorganize the company, by cutting liabilities and realigning expenses to make

the company solvent and restore its viability. The administrator would also be responsible for examination of routes to determine profitability and examination of load factors to determine the best fit of aircraft type. Additionally, the Administrator will realign systems, processes, structures and culture with strategy to achieve productivity gains and competitive advantage.

The administrator would petition the court with a plan to restructure the company, which would benefit LIAT by an automatic stay against its creditors, giving the Administrator sufficient time to reorganize the company and restore it to good health.

The Administrator would have full powers to negotiate terms with creditors, including agreement to reduce sums payable.

Creditors, including the staff of LIAT, would benefit from the Administrator’s obligation to pay them a minimum of what they would get in the event of liquidation.

“It means therefore, that orderly arrangements could be made from which LIAT 1974 Ltd, as a company, its shareholders, creditors, and staff would all benefit from an orderly plan. Under such a reorganization, creditors stand to recover funds and shareholders will have a viable entity to provide both utility and profits.” the plan declares.

It explained that in the unlikely event the reorganization fails, then the Administrator could proceed to liquidate the company.

(Source: Barbados Today)


  1. No private sector airline would want to get into bed with the Caribbean clowns association of government airline experts. Just take a long look at everyone of them. Some are struggling others have failed to run their countries, even mauby shop owners have more business sense than this band of misfits.

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