BRIDGETOWN, Barbados, CMC – The financially strapped regional airline, LIAT, has announced plans for a voluntary separation package (VSEP) that could result in more than 150 employees being removed from the company’s payroll.
“We will embark on a process of cost reduction right across the airline, but that will also include a reduction in the number of people that we employ in the business.
“We will embark upon that process in full consultation with our staff themselves, and also their representatives. We would wish to achieve these reductions, where possible, on a voluntary basis and that will be our aim,” said chief executive officer, David Evans.
Chairman of the shareholder governments, Prime Minister Dr. Ralph Gonsalves of St. Vincent and the Grenadines, speaking at the end of a meeting here, said his plans were to reduce the airlines debt significantly.
He said it would involve reducing the staff number from 800 to about 620, “which should save us about EC$13 million (One EC dollar=US$0.37 cents) per year.
“Of course, we’ll have to pay the severance cost of about EC$22 million.”
The meeting was also attended by host Prime Minister, Freundel Stuart, and his Dominican counterpart, Roosevelt Skerritt, and Antigua and Barbuda’s Minister of Public Utilities, Civil Aviation and Transportation, Robin Yearwood.
“The change in strategic direction is welcomed by Barbados. We expect to see a turnaround in LIAT’s fortunes, more responsiveness to market messages and, of course, once the whole issue of fleet renewal is complete, the disposal of the seven remaining Dash 8 planes and the reduction in the head count is complete, we think that LIAT will be on a much more viable and sustainable footing,” said Prime Minister Stuart.
Evans said the airline had no choice but to trim its workforce, given the fact that it is spending an estimated 27 percent of revenue on staffing.
“We hope to come out of this process at the end of the year, leaner, fitter, more responsive to the market and, most importantly, more responsive to our customers.”
Gonsalves said the airline was also in need of an immediate cash injection to help stabilize its finances, and had approached the Barbados-based Caribbean Development Bank (CDB) for assistance.
CDB is already providing US$65 million to finance the re-fleeting exercise of the airline.
“We have to provide some working capital immediately in addition to these cost recoveries. The shareholder governments . . . have to find, in our proportion of the shares, EC$5 million,” he said, acknowledging that the meeting had taken place with the CDB “to finalize some matters which will be returned to us.”
LIAT’s chairman, Jean Holder, said that the inability to dispose of its retiring seven Dash 8 aircraft is also costing it about US$11 million annually.
He said a “weakening market” for the planes was among the reasons for being unable to offload the planes.
LIAT announced that it would re-locate four of the airline’s new ATR aircraft at the Grantley Adams International Airport here, while Antigua, where LIAT is headquartered, will have two. The remaining two aircrafts will be based in Trinidad.
“We have to be careful that we don’t play one country against the other, to say your base is shifting from here or there. You look at the performance and you see where you’re putting more planes for the movement or more persons.
“But it is one network and you don’t need to be a rocket scientist. The place where most people pass through in the LIAT network is Barbados; that is the reality,” Gonsalves said.