BRIDGETOWN: The cash-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,” said chief executive officer, David Evans. “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.”
Chairman of the shareholder governments, Prime Minister Dr. Ralph Gonsalves of St. Vincent & the Grenadines, said he plans to reduce the airlines’ debt significantly.
Dr. Gonsalves said it would involve reducing the staff number from 800 to about 620, which would save approximately 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,” he said.
Gonsalves made his comment following a meeting that was attended by Prime Minister Freundel Stuart, his Dominican counterpart, Roosevelt Skerritt and Antigua & Barbuda’s Minister of Public Utilities, Civil Aviation and Transportation, Robin Yearwood.
“The change in strategic direction is welcomed by Barbados,” said Stuart. “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 and 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.”
Evans said the airline had no choice but to trim its workforce given the fact that it is spending an estimated 27 per cent 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,” he said.
Gonsalves said the airline was in need of an immediate cash injection to help stabilize its finances and it had approached the Barbados-based Caribbean Development Bank (CDB) for assistance. The 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,” he said. “The shareholder governments…have to find, in our proportion of the shares, EC$5 million.”
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” was a significant reason LIAT has been unable to dispose of the planes.
LIAT announced that it would relocate four of the airline’s new ATR aircraft at the Grantley Adams International Airport in Barbados, while Antigua, where LIAT is headquartered, will have two. The remaining two aircraft 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 of 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,” said Gonsalves.