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LIAT may never fly again

Regional 01 Jul, 2020 Follow News

LIAT has been struggling financially for years

Caribbean airline LIAT is on the brink of liquidation, according to Antigua and Barbuda Prime Minister Gaston Browne. Flights are suspended until at least 15 July  and that could be enough to end the carrier.

LIAT has been struggling for years, often operating at a loss and significant losses in recent months are unsustainable for the consortium of governments that own the operation. Browne expects that this time LIAT will completely cease operations, hoping a replacement airline supported similarly by the local governments can quickly replace it.

Browne said a 2019 annual loss for LIAT of roughly EC$12 million (US$4.5mm) was in an era when flights were operating and generally full. Now the planes are grounded and there is no revenue, while fixed costs continue to mount. The airline does not have the resources to cover those losses and, from Browne’s comments, it also does not appear that the island governments will bail it out again. As a result, debts and staff must be cut.

Hundreds of staff are expected to lose their jobs as a result of what Browne calls “right-sizing” the airline. Browne appealed to LIAT’s current staff to not defy the process. He alluded to the potential for legal action by employee groups that could hinder the restructuring. He also pointed out that the Caribbean islands do not have a bankruptcy restructuring process like Chapter 11 filings in the United States, a situation that limits options and flexibility for LIAT.

Of LIAT’s 10-strong ATR fleet only a couple are owned directly. The rest are leased. Caribbean Airlines is now a major player in the region, providing inter-island connectivity and service to North America. Caribbean even delivered a profit in 2019, though that remains unlikely in 2020.

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