LIAT ponders dropping routes and job cuts

KINGSTOWN, St Vincent and the Grenadines, Thursday February 3, 2011 – LIAT has served notice that it will cut unprofitable routes if some countries refuse to give the airline the kind of assistance offered to foreign carriers, as the company revamps the way it does business in the Caribbean. Chairman Dr Jean Holder has also suggested there will also be job cuts as the carrier, which is projecting a US$1.5 million loss for 2010, tries to get on sound financial footing.

“LIAT does have to address some cost-cutting issues if it’s going to survive in the face of upcoming competition,” he said yesterday afternoon at a press conference held after a shareholder meeting in St Vincent, attended by host Prime Minister Dr Ralph Gonsalves, Barbados’ Prime Minister Freundel Stuart, and Prime Minister Baldwin Spencer of Antigua and Barbuda – all leaders of LIAT’s shareholder governments.

Among the measures under consideration is dropping routes which are not commercially viable.

LIAT has complained that several countries provide revenue guarantees to foreign airlines that fly to the region, but have strongly resisted doing the same for the regional carrier. Holder said yesterday that will no longer be tolerated.

“When we’ve done a cost benefit analysis of a particular service and it does not profit us, especially if the person is not a shareholder in the company, then we will not be able to continue that service without assistance,” the airline chairman said.

“So what I’m saying is that there’s going to be very much a new approach to how we do business in the region because the competition is coming and it’s coming heavy as far as we can see,” Holder added, in apparent reference to Trinidad and Tobago’s Caribbean Airlines (CAL) announcing that it will start flying into the Eastern Caribbean and new airline Redjet planning to enter the market with base fares which it said would be as low as US$9.99.

Holder said LIAT is engaged in a strategic planning process and it’s hoped the final session will be held this month.

“We’ve had a number of proposals put on the table which suggest that LIAT cannot continue to do the same thing it has been doing forever and expect a different result...We’re discussing how to change this airline to do things like lowering the cost of travel and at the same time giving satisfaction and…staying in business,” he said, although not revealing what the proposals are.

Payroll cuts needed 

On the issue of staff reductions, Holder did not go as far as confirming media reports that LIAT is planning to send home 100 of the 940 workers it currently employs, but he did acknowledge the need to cut the payroll.

“Nobody wants to lay off staff,” he said. “It’s the most painful thing for those who manage a company, but at the same time we cannot operate with a complement of staff which is in excess of what the company needs.”

Prime Minister Gonsalves told the press conference that LIAT could reap significant savings – US$3 million every year – if it closed city ticketing offices across the region, but he said not all of the 40 people employed in these offices would have to be laid off.

“You may be able to use staff in other parts of your operation, say at the airport. Some may be willing to go; some may have an interest in migrating, for instance; some may want to go off and study and they’d like to take their golden handshake, but you will save a lot of the fixed costs, so these are practical matters which any company would have to be looking at very seriously,” he said.

LIAT closed its Port of Spain ticketing office on January 28, informing customers that they could book flights through the airline's hotline, website, or at its airport office or through a local travel agent.

Meantime, Holder said the price of fuel has also been a major stumbling block for LIAT.

He explained that the airline started 2010 on an International Air Transport Association (IATA) projection of US$84 a barrel, but the airline found itself paying over US$100.

Prime Minister Gonsalves pointed out that the prolonged unrest in Egypt could push the price past the current US$102 and create even more problems.

LIAT is also looking at expanding its fleet and a meeting will be held in Barbados, perhaps as early as next week according to Gonsalves, to discuss that further.