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LIAT Facing Liquidation and Restructuring
The Prime Minister of Antigua and Barbuda announced over the weekend that the regional carrier LIAT Ltd. Airlines will likely face liquidation in 2020.
In an interview with a local Antiguan radio station, Prime Minister Gaston Browne shared that there will be a meeting of all LIAT shareholders in the coming weeks to discuss the carrier’s future.
“A decision will have to be made to collapse it, and then maybe the countries within the region will have to come together to form a new entity,” Browne said.
The Prime Minister was quick to add he does not see the region moving forward without a new airline serving the former LIAT markets, possibly funded by both private and public capital.
Dr. Ralph Gonsalves, Prime Minister to St. Vincent and the Grenadines, shared similar opinions. In his comments to the Daily Observer, a Vincentian outlet, he echoed the plan to liquidate LIAT and announced the airline’s board of directors has already issued a recommendation to do so. Notices of the plan have been submitted to the carrier’s shareholders under Antiguan law.
According to Gonsalves, LIAT does not have significant assets to satisfy the liabilities it owes. LIAT’s fleet consists of ten ATR aircraft — five ATR 42-600s and five ATR 72-600s — with LIAT only owning three of its aircraft. One of the largest liabilities LIAT owes is a $29 million severance payment it contractually owes to its’ employees.
LIAT Ltd, previously known as Leeward Islands Air Transport or LIAT, is headquartered in Antigua. It operates high-frequency inter-island scheduled services serving several destinations in the Caribbean. It employs 600 people, 400 of whom are based in Antigua.
LIAT is essentially a wholly-owned government entity, with 94.7% of the airline jointly owned by Barbados, Antigua and Barbuda, St. Vincent and the Grenadines, and Dominica governments. The remaining 5.3% is owned by other Caribbean governments as well as private shareholders and employees.
The airline had a difficult 2019, posting a $4.4 million loss. Before the coronavirus outbreak, it had an optimistic outlook for 2020, but the virus-driven shutdown of operations caused LIAT to announce in May that it needed an infusion of $5.4 million to stay aloft. While some funding was promised from two Caribbean governments, it falls well short of what the company needs to keep LIAT in operation.
If LIAT enters into liquidation, it will be the 14th carrier to collapse and face a possible shutdown of operations in 2020. LATAM, Avianca, Virgin Australia, Trans States Airlines and Flybe are among some of the others who are in bankruptcy and facing financial restructuring hurdles.
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