MIAMI – Gaston Browne, Prime Minister of Antigua and Barbuda, has announced that LIAT will enter liquidation and a new airline will take its place.
Speaking on local radio, Browne said that COVID-19 had not helped the Airline’s financial state.
The PM stated that “COVID would have actually, let’s say increased the losses exponentially, so whereas in all of 2019 LIAT made a loss of about EC$12 million, that was within the means of the shareholder governments to subsidize.”
He appears to imply that the more significant losses were too much for the shareholders and governments to swallow.
The Airline was founded in 1956 by Sir Frank Delisle using a single Piper Apache flying between Antigua and Montserrat.
Getting a new operation up and running
Browne is concerned that the region cannot see the area continuing without an air link, but does admit any new airline would require both public and private capital.
Browne does want to get a new operation going quickly, comparing today’s news to 1974 “when LIAT was collapsed, my understanding is that it took a day to start the operation of a new entity,” he said.”
“It may be a little more difficult to get it done within 24 hours, and I do understand that there are a number of stakeholders that we have to satisfy, especially creditors and I believe that we could do a work out with the various creditors and to literally get some arrangement in which they can accept that we are not conveniently closing LIAT 1974 Ltd. The governments cannot go any further with it.”
Not Enough Assets
The primary concern is that LIAT doesn’t own enough assets to satisfy the creditors. Its fleet of ten ATR, five ATR 42-600, and five ATR 72-600, is mostly not owned by the Airline, with LIAT only owning three of its aircraft.
The aircraft not owned by the carrier would be “charged to the Caribbean Development Bank,” meaning the Airline would have very few assets for liquidation. The lack of assets will affect severance packages and liabilities to staff alongside creditors. Browne says their positions on the issue will require negotiation.
Interestingly, Browne doesn’t want the new Airline to move away from the LIAT name. He said “LIAT is a Caribbean institution built by Caribbean people of which we should be proud.”
A Leaner Return for a New Airline
He went on to cite examples of institutions in the US in the aviation industry, including American Airlines, which “have gone belly-up many times over. They never discontinued the name American Airlines. Americans are proud to support the name American Airlines, but whereas they have their Chapter 11 protection, we don’t have that in our laws.”
While a new airline has the potential to re-employ some of those who are out of work due to the liquidation, Browne did say a refreshed operation would be far leaner; as a result, not everyone could be re-employed into the new Airline.
Browne closes off saying, “if you are going to have a new entity that is scaled down, that is viable, that is efficient, that can meet the connectivity needs of the Caribbean people, then clearly that has to be the option that we pursue.”