MIAMI — Although hurricane season in the Caribbean has been quiet, the future of regional airline LIAT is still stormy. Last week, the airline has decided to sell and lease back two of its ATR aircraft in a move to raise capital and maintain the feasibility of its business.
Despite the speculation fueled by the decision, LIAT CEO David Evans dismissed the rumors in a radio interview: “There is a transaction in the airline industry known as a sale and leaseback, where you sell an aircraft and lease it back from a leasing company, and that’s what happened. We still have (owned) nine aircraft” Evans stated.
Last April, the relationship between the shareholders soured as a set of documents were leaked to the local media detailing the plans of Barbados in divesting its 51 per cent share holding in the carrier and establishing a new airline. Antigua and Barbuda prime minister Gaston Browne expressed outrage over the plans, and accused Barbados government to seek the collapse of LIAT, which in his opinion is “contrary to the spirit of Caribbean integration”.
LIAT, a key role player in regional travel and tourism industry in the Caribbean, received in 2013 a $100 million loan provided by Barbados-based Caribbean Development Bank (CDB) for the purchase of these ATR aircraft. During the radio interview, when Evans was asked why LIAT chose to sell the aircraft so soon after securing the loan, the CEO assured “markets and situations change and you always look for a balanced portfolio in your fleet.”
Caribbean carriers have faced strong headwinds in the last years. A strong competition from foreign carriers serving the region, and the entry of low-cost carriers in key markets such as Barbados and Port of Spain, have taken a toll on local airlines. Just this week, Caribbean Airlines has decided to put to and end its London Gatwick route in the first quarter of 2016, plus returning four Boeing 737-800 and its 767-300 fleet.