Antigua aims to buy assets of LIAT (1974) to set up LIAT 2020, while Gonsalves targets new regional airline

Montego Bay, Mon September 4, 2023 - While St. Vincent and the Grenadines prime minister Dr. Ralph Gonsalves is proposing the creation of a new airline to serve the OECS, the administration of Antigua & Barbuda’s prime minister Gaston Browne says negotiations are underway  by LIAT (2020) Limited and the court-appointed Administrator of the intra-regional airline, LIAT (1974), regarding the purchase of the assets of the bankrupt airline.

The press throughout the English-speaking Caribbean has carried stories indicating that LIAT is a crucial development partner throughout the Caribbean and must be resuscitated, according to a statement issued following Thursday’s Cabinet meeting.

“Other states have been pursuing the establishment of another airline that would not compete on LIAT’s Routes; however, LIAT (2020) is more than a year ahead of its competitors in its planning to replace LIAT (1974) Ltd. and is likely to outperform them.”

The Antigua and Barbuda government is the primary shareholder in LIAT (2020), and it has already stated that it is willing to invest between $15 and $20 million in the new business.

According to the statement made following the Cabinet meeting, the new airline  which is expected to become operational within a few months “will have a total of six planes and would have already secured the Air Operating Certificate (AOC).”

Prime Minister Gaston Browne is determined to move forward with establishing LIAT 2020, with or without the assistance of his regional counterparts.

On Saturday, Browne stated on his private radio station, Pointe FM 99.1, that he is aware that Antigua and Barbuda must take care of LIAT 2020 on their own, which is acceptable.

What Browne would not accept, however, is attempts by certain shareholders to relocate the headquarters from the twin island nation.

Last week, Dr. Ralph Gonzalves, the Prime Minister of St Vincent and the Grenadines announced that a new entity is being considered for establishment. The plan is to have the airline based in St Vincent and the Grenadines.

Gonsalves told a news conference in Kingstown that the airline’s first shareholders may be the governments of the Organization of Eastern Caribbean States (OECS), but that “we would have to engage the Caribbean Development Bank on this exercise as well.”

Antigua and Barbuda, Dominica, Grenada, St. Lucia, St. Vincent and the Grenadines, St. Kitts-Nevis, Montserrat, Anguilla, and the British Virgin Islands comprise the OECS.

While the location of the airline’s headquarters has not been addressed, Gonsalves stated that he is “offering” St. Vincent and the Grenadines as one of the choices.

The CDB has been studying the issue of regional air transportation since May 2015 and was once again asked by regional leaders in January 2023 to review the longstanding problem of transportation scarcity, which has hindered the free movement of people within Caricom.

Gonsalves proposed that  “my perspective and that which I am urging, is a new entity [and] you can call it WIAT if you want—West Indies Air Transport—or whatever name you want to call it''.

He explained that the revitalisation of the Antigua-based airline could lead to future litigation, such as from the carrier’s creditors – something regional leaders were keen to avoid.

“I know LIAT has a particular marketing brand and has served us well until it collapsed in 2020. But I am not clear in my mind and have not been properly advised that reviving the airline under LIAT 2020 or 2023 Ltd would not present some particular hurdles and potential litigation,” Gonsalves argued.

While Browne agrees, he said the population center does not dictate where the headquarters should be; instead, it dictates the amount of traffic. Regional governments have attempted to relocate Antigua and Barbuda’s headquarters before, something Browne recalled.

“Even going back to the Freundel Stuart administration, they wanted the headquarters too…and we resisted it. So I think it got to the stage where they said “if we not getting it, well we not participating”. I may be wrong but it’s very probable that this may be the thinking,” he added.

Browne said regional leaders are considering various scenarios for a new entity, but Antigua and Barbuda remain committed to LIAT 2020.

The Cabinet also invited the Development Commissioner to its meeting, who has been tasked with negotiating the terms of the final agreement between LIAT (2020) Ltd. and the principals of Air Peace, a private Nigerian airline founded in 2013, “for the purpose of establishing a governing agreement between both carriers.”

This proposed collaboration entails both entities injecting funds and other valuable assets into LIAT 2020, culminating in Air Peace securing a controlling interest.

This endeavor aims to establish an airline capable of effectively catering to the inter-island connectivity demands within the Eastern Caribbean.

The announcement by the Antigua  government comes even as the Antigua & Barbuda Workers Union said it wants the Administrator to provide the public with an update on the future direction of the company.

The union's general secretary says efforts are continuing to secure severance payments for the employees of the airline that entered into administration in July 2020 because of increased debt and the impact of the COVID-19 pandemic.

The ABWU has maintained that any potential agreement should be based on 100 percent of severance comprising a majority cash component and the remainder organised as shares in any future derivative of LIAT.

The airline is owned by the governments of Antigua & Barbuda, Barbados, Dominica, and St Vincent & The Grenadines. 

While Barbados and St. Lucia governments have made available funds to cover the three-year outstanding debt to the workers in their countries, this has not been the case with employees in the other states.