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 Post subject: UPDATED 10 April 2014: How LIAT's debt is stacking up...
UNREAD_POSTPosted: Sat Mar 15, 2014 
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This calculation is based on the only available financially-responsible numbers concerning LIAT's accounts over the last decade (which are actually published accounts from the Barbados Government itself), here is a not-unreasonable projection of LIAT's current and future debt giving the total, and then a breakdown of the four largest shareholders (which together account for over 90 percent of shares), followed by the remainder (which account for less than 10%).

[10 April 2014 Note: an additional account was found (see below) which provides the 2012-2013 government numbers for Barbados. That annual amount provided to LIAT rose by 14.54%, almost triple the increase for 2011-1012, and the projected numbers below now reflect that reality with a newly-calculated three-year average of just over 10%.]

With the three largest shareholder countries (who hold almost 90% of shares) basically bankrupt, our team of consultants gives LIAT somewhere between 6 months and a year of survival - before there simply is no more money available to pour down the bottomless pit.

We estimate that LIAT will be gone somewhere around the end of this year, 2014.

Where the LIAT shareholders had a final opportunity in March 2014 to make a clearly needed and firm commercial correction, clean up its act and put LIAT back on course to an improving financial footing, they turned away all of the CEO applicants who were brave enough to tell them that major changes would be needed, then called on the Chairman (and un-named consultant/s) to dither for another 100 days while they spend more time "looking at" solutions (politico-speak for sit around and compliment each other on a job well done) before any action is taken.

The shareholders will reasonably then give them another 100 days to prove it does not work... so 200 days = about 6.5 months from March, 2014 = November/December 2014.

Given the enormous losses and reducing passenger revenue - a WinAir-Air Antilles consortium just (mid-April 2014) sealed the Dominica market against LIAT - we can't see any responsible source of finance or investment touching this hammered dying duck again, not even the CDB... ergo, there is almost NO chance it will survive.

It must also be noted that the shareholders have not even been paying LIAT the amounts they committed to for the aircraft type change, and information from from more globally-experienced heads make it clear that this un-necessary fleet renewal will not cost the projected US$100 million, but probably closer to $250 million (perhaps more) by the time training, spares packages and other new-fleet expenses are taken into account.

These new ATR-42/72 (-600 variant) aircraft are also known to be fault-prone and high-maintenance, to the point where ATR had (may still have) a group of factory engineers based at Piarco Airport in Trinidad to keep those purchased by Caribbean Airlines flying.

LIAT's non-aviation-savvy shareholders and Board were basically conned into spending an enormous amount of cash simply to make their operating costs a fraction cheaper for the five years the new aircraft are under warranty. A real-world examination of alternatives would have demonstrated that other airlines - such as Air Canada - are still operating Dash-8 aircraft older than LIAT's and have no known plans of re-fleeting.

If it were really necessary, the cost of swapping out the current fleet for younger Dash-8s - or having the current fleet refurbished - would have been a fraction of the money that will eventually be spent on ATRs. And the 2013 "meltdown" which destroyed whatever remained of the airline's "good will" in the sub-region would not have happened.

A calculation of real-life numbers suggests that LIAT is now making some US$1.3 million a month in aircraft lease payments... and has at least once had to decide whether to pay either those leases or employee salaries at month-end (and the employees lost out).

Figures provided by an experienced regional airline CEO in our team show that the Dash-8-300 is actually cheaper to operate over 200 and 300 nautical mile sectors than either the ATR 42-600 or the 72-600 models brought in by LIAT.

The numbers provided below suggest that, if LIAT is kept going by the shareholder governments. the losses will now surpass one Billion US dollars in SIX years (instead of the seven in the original calculation).

It is almost as if the shareholders are actually trying to find a way to shut the airline down.

Creditors beware!!

--

Basis of calculations:

Quote:

      According to an actual Barbados Government-issued document “BARBADOS - ANNUAL REPORT AND FINANCIAL STATEMENTS OF THE ACCOUNTANT GENERAL FOR THE FINANCIAL YEAR 2011-2012”, located here,
      http://www.treasury.gov.bb/sites/default/files/Financial%20Year%202011-2012%20Annual%20Accountant%20General%20Report.pdf.pdf

      Page vi
      (PDF file Page 9)
      "The value of investments in LIAT was $109.9 (US$ 55) million compared to $103.9 (US$ 52) million in the prior year."

      Page 36
      (PDF file Page 56)
      Support for Liat (1974) 6/SFR - OR - BAR
      Nominal value of loans raised US$ 33,631,879
      Net Proceeds of loans raised US$ 62,923,837
      Annual interest rate 3.81
      Date to be redeemed 1-Jan-28
      Amount outstanding US$ 56,948,883



Update 10 April 2014

Quote:




Extraction:

    - Barbados paid to LIAT...
      in 2011 US$52 million,
      in 2012 US$55 million,
      in 2013 US$62 million.

    That year-to-year increase is 5.76923% and 14.54% respectively, producing an average over those 3 consecutive years of 10.16%.

If Barbados owns 50.3% of LIAT, that translates to the airline losing (approximately)...
    in 2011 US$104 million,
    in 2012 US$110 million,
    in 2013 BD$124 million,

    Note:
    This first document also indicates that the Barbados Government is still owed some US$50 million by LIAT from an existing loan. Should LIAT close, that will necessarily be part of the cost accounted to the Barbados taxpayers, and cannot be simply discarded.


    --

    Shareholder % Shares

      Barbados 50.30
      Antigua 30.75
      St.Vincent 11.83
      Dominica 0.98
      Other 6.14
      - - Total 100.00



      Note: in 2012, Dominica appear to have purchased 0.98% shares in LIAT for EC$3 million, which puts the valuation of the airline in 2012 at EC$306 million, or BD$226 million, or US$113 million.

--

Calculated payments for losses

--

TOTAL

(All figures US$ million unless otherwise noted)

Total 2011 - 103
Total 2012 - 109 (+5.76923% actual)
Total 2013 - 125 (+14.54% actual, resulting in an average over 3 years of 10.16%

Total 2014 - 138 - year 1 (+10.16% average)
Total 2015 - 152 - year 2 (+10.16% average)
Total 2016 - 167 - year 3 (+10.16% average)
Total 2017 - 184 - year 4 (+10.16% average)
Total 2018 - 203 - year 5 (+10.16% average)

100.00 percent of shares US$ 845 million
- or BD$ 1.69 Billion
- or EC$ 2.28 Billion

Seven-year onward projection of total, 2014-2020...

Total 2019 - 224 - year 6 (+10.16% average)
Total 2020 - 247 - year 7 (+10.16% average)

6-year grand total 2014-2019 inclusive
= US$ 1,068 million (or US$1.07 Billion) dollars

7-year grand total 2014-2020 inclusive
= US$ 1,315 million (or US$1.32 Billion) dollars
= BD$ 2,630 million (or BD$2.63 Billion) dollars
= EC$ 3,550 million (or EC$3.55 Billion) dollars

--

BARBADOS

(All figures US$ million unless otherwise noted)

Barbados 2011 - 52
Barbados 2012 - 55
Barbados 2013 - 63
-- Average used = 10.12 % increase

Barbados 2014 - 69
Barbados 2015 - 76
Barbados 2016 - 84
Barbados 2017 - 93
Barbados 2018 - 102

50.30 percent of shares US$ 425 million
- or BD$ 850 million
- or EC$ 1,148 million

6-year grand total 2014-2019 inclusive
= US$ 537 million dollars
= BD$ 1,074 million (or BD$1.07 Billion) dollars

7-year grand total 2014-2020 inclusive
= US$ 660 million dollars
= BD$ 1,220 million (or BD$1.22 Billion) dollars

--

ANTIGUA

(All figures US$ million unless otherwise noted)

Antigua 2011 - 32
Antigua 2012 - 34
Antigua 2013 - 39

Antigua 2014 - 42
Antigua 2015 - 47
Antigua 2016 - 51
Antigua 2017 - 57
Antigua 2018 - 62

30.75 percent of shares US$ 260 million
- or BD$ 520 million
- or EC$ 702 million

6-year grand total 2014-2019 inclusive
= US$ 328 million dollars
= EC$ 656 million dollars

7-year grand total 2014-2020 inclusive
= US$ 403 million dollars
= EC$ 1,088 million (or EC$1.09 Billion) dollars

--

ST.VINCENT

(All figures US$ million unless otherwise noted)

SVG 2011 - 12
SVG 2012 - 13
SVG 2013 - 15

SVG 2014 - 16
SVG 2015 - 18
SVG 2016 - 20
SVG 2017 - 22
SVG 2018 - 24

11.83 percent of shares US$ 100 million
- or BD$ 200 million
- or EC$ 270 million

6-year grand total 2014-2019 inclusive
= US$ 126 million dollars
= EC$ 340 million dollars

7-year grand total 2014-2020 inclusive
= US$ 155 million dollars
= EC$ 418 million dollars

--

DOMINICA

(All figures US$ million unless otherwise noted)

Dominica 2011 - 1
Dominica 2012 - 1
Dominica 2013 - 1

Dominica 2014 - 1
Dominica 2015 - 1
Dominica 2016 - 2
Dominica 2017 - 2
Dominica 2018 - 2

0.98 percent of shares US$ 8 million
- or BD$ 17 million
- or EC$ 22 million

6-year grand total 2014-2019 inclusive
= US$ 10 million dollars
= EC$ 27 million dollars

7-year grand total 2014-2020 inclusive
= US$ 13 million dollars
= EC$ 35 million dollars

--

OTHERS

(All figures US$ million unless otherwise noted)

Others - 2011 - 6
Others - 2012 - 7
Others - 2013 - 8

Others - 2014 - 8
Others - 2015 - 9
Others - 2016 - 10
Others - 2017 - 11
Others - 2018 - 12

6.14 percent of shares US$ 52 million
- or BD$ 104 million
- or EC$ 140 million

6-year grand total 2014-2019 inclusive
= US$ 66 million dollars
= EC$ 178 million dollars

7-year grand total 2014-2020 inclusive
= US$ 80 million dollars
= EC$ 216 million dollars

With an average remaining annual shortfall of EC$8.5 million, in 2014 the 21 "Other" shareholders would EACH have to find over EC$400,000 every year (and rising at the average +10.16%, of course).

--

(OTHERS = all the other minority shareholders of LIAT... the following is taken directly from LIAT's web page...)

GOVERNMENT OF GRENADA
GOVERNMENT OF GUYANA
GOVERNMENT OF JAMAICA
GOVERNMENT OF ST. KITTS AND NEVIS
GOVERNMENT OF MONTSERRAT
GOVERNMENT OF ST. LUCIA
GOVERNMENT OF TRINIDAD AND TOBAGO
ANTIGUA COMMERCIAL BANK
ANTIGUA BARBUDA INVESTMENT BANK
ACB INVESTMENT CO. LTD
ANTIGUA & BARBUDA WORKERS UNION
BWIA WEST INDIES AIRWAYS LTD.
CARIBBEAN AIRWAYS
HKH (ANTIGUA) LTD.
LEEWARD ISLANDS AERONAUTICAL ENGINEERS ASSOCIATION
LIAT STAFF PROVIDENT FUND
NATIONAL COMMERCIAL BANK OF DOMINICA LTD.
NATIONAL COMMERCIAL BANK OF GRENADA
JOAN B. SLACK
STATE INSURANCE CORPORATION
ST. JOHN'S CO-OPERATIVE CREDIT UNION


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