Liat seeks end to losing streak

By Gay Nagle Myers

Bad news this year, better news next year.

Jean HolderThose eight words pretty much sum up the past and future for Antigua-based regional carrier Liat, which expects to record a loss of $8.5 million in 2012.

On the brighter side, it projects a profit of $2.5 million in 2013 and $14.7 million by 2017.

CEO Ian Brunton and Chairman Jean Holder recently unveiled a new business plan to reverse the carrier's fortunes, a plan that includes revamping and downsizing its management structure to a team of six executives headed by the CEO and upgrading the fleet to 50-seat and larger turboprop aircraft.

The airline, which was established in 1956, making it the longest-surviving Caribbean carrier, has been in the red for several years, losing $7.4 million in 2010 and $15.8 million last year.

Brunton placed the blame on higher fuel costs, combined with lower passenger traffic and an aging fleet, plus high maintenance and employee costs.

Taxes, too, figured into the challenges.

"We [collect] 66 different taxes, accounting for 30% to 50% of the cost of regional fares," Brunton said. "We have no control over the level of taxes charged. We just collect them."

Liat 2012 loss 2013 profitsLiat is a company with three major shareholders: Antigua, Barbados and St. Vincent.

Holder added that unlike other airlines in the region, Liat "does not enjoy the luxury of an annual subsidy to cushion annual financial losses. It has operated unprofitable flights for years to countries that do not pump a penny into the airline."

'Time to feed the cow'

Holder added: "The capital investment now needed will be a lot less onerous if shared among the 21 countries served by Liat. It is time to feed the cow, rather than drinking its milk, using a straw through the fence."

Dominica has signaled its intent to provide some financial support to help cover the costs of the 100 daily flights Liat operates, Holder said.

The list of challenges is daunting: Stem the tide of losses, upgrade the fleet, improve on-time efficiency, increase revenue and boost load factors.

That's a formidable list, but Liat is placing its bets on a brighter future, in part thanks to the loss of a major competitor.

American Eagle will complete its pullout from the Caribbean region by March, "which puts Liat in a position to take the opportunities presented by this market gap and increase our revenue base," Brunton said.

Eyeing new markets

Even as Liat plans to dump 39 unprofitable flights affecting 18 countries, the carrier is eyeing new markets, including Haiti, Panama, Jamaica, Aruba and Punta Cana in the Dominican Republic.

Way down the list of priorities is a possible expansion into North and South American markets by acquiring midsize jets.

To fund the fleet renewal, Liat is targeting a 20% financial contribution from its three major shareholders and an additional 5% from other regional governments, such as Dominica, "which have expressed an interest in investing in Liat," according to Brunton.
 

Follow Gay Nagle Myers on Twitter @gnmtravelweekly. 

This page is protected by Copyright laws. Do Not Copy. Purchase Reprint
blog comments powered by Disqus

View Comment Guidelines

Please upgrade your Flash Player.
Please upgrade your Flash Player.

Travel Weekly Poll

Voices

  • Consumer media discover that travel agents do exist

    "Contrary to some thoughts, travel agents do exist ... We are usually able to get clients better prices, and we know we can see that clients have better experiences. And as our personal motto is: Our Service Travels With You."

    More»

TW Index: Most Active Stocks

Latest Top News:
Caribbean
Europe
Travel Weekly is on Facebook
Viewpoints For Travel Agents
Travel Weekly Topics