Open letter from Prime Minister of Antigua and Barbuda Gaston A. Browne
If the majority shareholding group of LIAT is allowed to opportunistically collapse this regional institution and form a new entity without honouring the institutions’ liabilities to creditors; this will be a form of State banditry.
Creditors including the staff of LIAT, for decades, provided service and credit to LIAT as an insolvent institution, knowing that they had the backing of the shareholding states.
For these states to walk away from their liabilities, is morally reprehensible and perhaps illegal. If shareholders wanted to limit their liability, they should have ceased trading years ago, knowing that the institution was insolvent.
From my limited professional studies, I was taught that directors who knowingly operate an insolvent company is liable for wrongful and possibly fraudulent trading.
The members of the shareholding board of LIAT participated as directors over the years and presided over most of major decisions of LIAT, including the ill-fated refleeting.
The liquidation of LIAT without settling liabilities should be resisted by creditors and other stakeholders.
The possibility of legal action to stop the liquidation and protect the interest of creditors should not be ruled out. The state has an obligation to protect, not hide behind legal arguments and exploit vulnerable creditors.
Instead, minority shareholders and Creditors should call for a reorganization plan. This plan would see the right sizing of LIAT and work out the situation with creditors. All shareholder governments should write off landing and other fees owed to them and the staff and other creditors should take a hair cut to facilitate the reorganization of LIAT.
If a bloated inefficient LIAT could have made a small loss of 12 million last year, it stands to reason that a lean reorganized LIAT could make a profit.
While a reorganized LIAT should be structured to turn a profit and reduce the burden on governments for a subsidy, kindly note that the benefit of a regional airline should not be determined exclusively by its profitability, but by its economic contribution and air connectivity value to the region.
Existing shareholders should be given the opportunity to surrender their shares if they do not wish to participate in the new reorganized LIAT and members of the private sector and all governments that are willing to participate in the new entity should be given the opportunity to do so.
To deny them this option represents a suppression of other stakeholders interests.
Antigua and Barbuda stand ready to invest $40-$54 million in the reorganized LIAT and there are other governments and private interests that are willing to invest in the reorganized LIAT.
The reorganization plan will preserve route rights, including rights to US territories. Some jobs will be saved, new jobs created as the reorganized institution grows and air connectivity for Caribbean people will be assured. This will bring to an end the present chaos and confusion that the majority shareholding group is pursuing.
The restructuring will also have to look at the suitability of the fleet to service the region. A mixed fleet of 42 seaters and 19 seat twin-ottos is likely to be the best mix. The 72 seaters should be returned to the Lessors, they are beyond our means. This mixed fleet will ensure both the northern and southern corridors are adequately served.
The above is a doable plan, resulting in a win-win solution for all stakeholders. Therefore, we strongly recommend the reconsideration of the proposed liquidation and to allow the pursuance of a reorganization LIAT in the interest of all stakeholders.
If we fail to do so, then every state is likely to establish a national airline, without viability and sustainability.
The airline industry is so capital intensive, it is beyond the means of any singular state, or the private sector to sustain an airline, that could meet the air connectivity needs of the region.
With the current pandemic, which will make our individual states more vulnerable, this is a time for true integration in action and not merely in words. The benefits of the integration movement should be shared in keeping with the objectives of the CARICOM and OECS integration institutions.
Petty jealousies and the poaching of each other’s business entities during a time of crisis should be discouraged. Instead, we should use our talent, intellect and creativity to attract foreign direct investments to supplement domestic investments.
Finally, the subterfuge, to hide behind legal arguments and flawed opinions to kill LIAT as a perceived “predatory” airline, in pursuance of insular objectives will not work. One of the outcomes of such a decision is a weakening of regional integration and less commitment to sustaining regional institutions.
We should be careful with the precedents we establish. It’s LIAT today, but it may be the OECS, CARICOM Secretariat, or some other regional institution that may suffer a similar fate in the near future. As we collapse these institutions, we collapse the integration movement.
Ultimately, LIAT will rise again like a phoenix from the ashes. We will never allow anyone or group of insular Caribbean leaders to kill this important regional institution.
Let’s come together as stakeholders and reorganize LIAT, in the spirit of true CARICOM integration and in the interest of all.
Gaston A. Browne