[Letter, Thompson] How did LIAT get here?
15 May, 2019
- Mottley, Gonsalves and Shareholders Plot a Course for LIAT’s Free Fall
May 19, 2019
The following Editorial was published in the Antigua press May 17, 2019 and should be of interest to the BU family and wider community. The author is a pilot.
- David, Blogmaster
The Vincentian Prime Minister has publicly stated on more than one occasion recently that the employees don’t understand the gravity of the crisis at LIAT. Yet the shareholders and executive management have been sitting on the CDB report for some time and have taken no action. Is this sign of a dynamic board of directors and executive management? Isn’t this what PM Chastenet is saying in different words? That he doesn’t have enough confidence in the present LIAT management and Board of directors to invest?
The executive management of LIAT up to the time of writing have themselves not signed on to accept the recent proposed 10% pay cut for employees, despite Prime Minister Mottley’s public statement that all proposed cuts would be across the board. One would have thought that before coming to address the staff that Prime Minister Mottley would have had such an undertaking in writing, especially in the light of the strained relationship between the executive management and the employees. This is the same executive management that PM Spencer exempted from taxes for 10 years in Antigua, while the rank and file paid the same.
PM Mottley may not have gained any employee confidence from trying to force union officials to agree to concessions without returning to their memberships for authorization. Surely PM Mottley knows how unions work and that such a request was unreasonable. PM Mottley told the employees/unions that she had an April 01st deadline with the IMF and needed to sort out her country’s way forward.
But here we are on May 06th, and no union or employee yet has any idea what decisions Prime Minister Mottley has made regards LIAT.
Would it not have been better for Prime Minister Mottley to have had a plan for the employees to buy into rather than ask for concessions without any future to buy into? I am unsure as to who would buy into accepting salary cuts without a plan. The same executive management and shareholders who own the airline have to take responsibility for where the airline is today. The reality is the owners and executive management have designed and blessed all the previous plans, including the ATR acquisition plan, which according to the plan, was supposed to show a profit within a year. Now 5 years on, this plan has clearly failed. Yet some want the employees to continue under the same management and shareholder arrangements, with no reduction in government taxes, and to accept salary cuts.
No-one has publicly commented on PM Gonsalves’s statements (lead Prime Minister on LIAT) that a Vincentian airline be employed to pick up any shortfall arising out of the LIAT’s present dilemma, potentially at the expense of LIAT employee jobs. This appears to be more of a local than a regional outlook. PM Gonsalves refers to the One Caribbean operation as, “a group of ambitious Vincentian pilots” and I agree. But what PM Gonsalves fails to mention is that despite their aircraft’s smaller size and capacity, their pilots are paid comparable rates to LIAT pilots who currently fly bigger aircraft. But to his credit, PM Gonsalves is perhaps on to something in saying that regional air traffic would benefit from the deployment of smaller aircraft, although his focus curiously seems to be on One Caribbean rather than LIAT in this regard.
I do not believe that talk of closing the company has caused anything but stress in the life of LIAT workers. It would not have motivated many customers to book future flights, in light of the airline’s uncertain future. The talk of paying severance in drips and drops as shareholder owner governments should the airline collapse, is in my view irresponsible talk and leadership from political parties that have “Labour” as part of their very names. Indeed, LIAT’s industrial relations record is terrible. Even with a designated internal counsel, they have managed to lose the vast majority of their cases against employees; and they are yet to settle many major outstanding cases, including the case against former LIALPA President, Captain Blackburn. I have no issue with female managers, but I do have an issue with incompetent management, regardless of gender. Yet the shareholders currently see no reason for changes in executive management.
There would certainly appear to be square pegs in round holes. Could it be that many retain their jobs because they know the details of aircraft acquisition and leases? How many managers does our beloved regional airline have with a staff complement of 700 employees? Why does LIAT pay exorbitant rents when it has had land on which to build since 2000? And what has the Chairman of the Board, Mr. Jean Holder, who has had this position for many years, brought to the table? Despite his long tenure, the gentleman seems still to have little clue to what goes on in LIAT and provides little leadership in solving the fundamental problems.
No getting away from it, LIAT fares are high. The 47% tax on every ticket has a lot to do with that. Yet the shareholder governments refuse to decrease their taxes, which annually far outweigh shareholder contributions into LIAT. Would any current LIAT user really take issue with an additional charge on checked baggage as proposed by the employee group which could generate the operational shortfall alluded to by the executive management and board of shareholders? If you are paying $600 to go on a 30-minute flight, would $615 make a world of difference? Yet the same shareholders/owners want the employees to take a pay cut while maintaining their taxes. Even the current LIAT CEO, by no means the transformational leader and woefully short on aviation business management expertise, is on record as saying the governments need to reduce their taxes to stimulate regional travel.
And where was the CDB oversight having loaned the governments the money for the ATR acquisition plan and by so doing, endorsing this plan? It was blatantly obvious to most employees from the first 6 months of that plan, that none of the plan’s revenue targets would be met, yet no one has ever been held accountable for the plan’s failure. I challenge LIAT to publish the figures of the first 2 years of the ATR operation. The early sale and releasing of some of these aircraft, speaks to the plan being in trouble from early on. And the CDB head, Dr. Smith, with the experience of being a former LIAT CEO, should have some familiarity with regional air travel issues.
Have the shareholder governments seriously tried to fix the inherent problems they are aware of in LIAT? Each shareholder government has its own problems and agendas. PM Mottley publicly referred to unprofitable routes being dropped, and calls being made, and these routes reinstated. PM Mottley the largest shareholder has IMF arrangements, but if LIAT closed, what would these shares be worth? PM Gonsalves continues his rhetoric about closing and never forgets to mention One Caribbean. Yet no-one has asked him if he, or is his government, is any way involved with this entity. There can be little doubt that in many ways LIAT has been a political football for years. Perhaps it is time to seriously address the CDB restructuring option properly. PM Browne of Antigua where LIAT has the most employees has said very little on the LIAT situation until recently with his news of a potential investment by Richard Branson. I doubt his economic powerhouse would be unaffected by a LIAT closure. At least by his government’s recent amendment of the Labour laws, employees are guaranteed their severance under law.
As PM Gonsalves stated recently on an Antiguan radio station interview (ZDK) that, “the pilots have good ideas, but they are not the owners. Surgeons don’t run the hospital”. So, we will wait and see what the owners do. History would suggest that between Prime Minister Gonsalves and the incumbent LIAT CEO they will find a way to blame it all, as has been the ongoing strategy for executive and shareholder ineptitude, on the pilots. It is noteworthy that when the incumbent CEO tried that approach recently at the Barbados meeting between the unions with, Prime Minister Mottley to her credit and armed with a credible rebuttal document from the pilots’ union, publicly rebuked the CEO for perpetuating this farce.
Not being a prophet, I cannot say if LIAT will close, but it should be noted that this was stated as the most expensive option in the same CDB report and something that the shareholders are intimately aware of. I am not sure how closing the airline would help the governments given severance payments would be required, employees out of work, there would be a significant reduction in regional airlift, and no taxes for the governments. It is confusing how Caribbean governments can find money to subsidize international carriers, collect taxes from LIAT and have no money for LIAT to continue its touted important role in regional connectivity/integration.
Finally, how did LIAT get here? In February the staff were informed by letter from the CEO that the company was on course to make a modest operational profit. 3 weeks later, following a meeting of the CARICOM heads, PM Rowley disclosed that LIAT only had 10 days of operating cash left and there was an impending crisis. Some suggest that PM Rowley had spoken out of turn; but perhaps the public now better understands why there is little trust between the staff and the airline’s executive management and board of shareholders.