Credit union survives BWIA turbulence

When national airline BWIA sent home more than 600 employees early last year, it struck a hard blow not only to the workers who were put on the breadline, but also to one of the company’s most loved spinoffs — the Aero Services Credit Union. What made it more daunting was that the termination packages promised by the airline were not ready at the time the workers made their final walk through the gates at Piarco, so many of them zeroed in on their friend in need the Credit Union, seeking financial assistance of various kinds. It has to be understood that the country was experiencing a buoyant economy with a high level of growth, something which had not been seen since the mid 80s or thereabouts. Things were really flying along nicely, moreso for airline employees, when suddenly unexpected turbulence hit and the impact of the dismissal of BWIA employees, the majority of whom were members of the credit union, impacted severely on the Society.

A plethora of loans or alternately hundreds of applications for substantial shares withdrawals could seriously affect the stability of the Society and so while the credit union’s executive had to deal with a financial component on the one hand, it also had to deal with a psychological component on the other. But according to the directors, the Board was “unrelenting in its pursuit to redefine its strategic intent in order to ensure that the Society not only thwart/minimise any haemorrhaging as a consequence of the ongoing events at the host company (BWIA) and remain its members’ premier financial institution of choice, but to continue its growth in terms of membership, investment, credit and asset base.”

The events at BWIA obviously opened a lot of eyes at Aero Services and this was clearly articulated when president Kester Husbands said, “A key component to our Credit Union’s continued success and longevity is the long-term stability and viability of BWIA. “While a sense of uncertainty amongst many of us continue to pervade the corridors of the organisation, (BWIA) those of us dubbed the “survivors” must be in constant recitation of our prayers in cognisance of the contribution made by the government of our beloved country towards BWIA’s continued existence,” he added.

While medical expenses accounted for only three percent of the loans total, loans for Christmas expenses recorded 3.2 percent, while vacation loans took care of eight percent and loans for education purposes another 8.35 percent. In spite of the all out effort made by the Credit committee to reduce share withdrawals through educational programmes all aimed at helping members to make “more prudent financial decisions,” this activity increased over the previous year reaching close to $3 million. The figure for 2002 was $2.35 million. The committee feels however that had they not increased interviews and counselling, that figure could have been much higher. Referring to the highly touted impending international agreements like the Free Trade Area of the Americas (FTAA) and the Caricom Single Market and Economy (CSME), president Husbands called for membership support for the Credit Union “as we bring our collective will to bear in confronting the challenges of this new era.”

Husbands also spoke about last year’s constraints where returns on investments were concerned. “During 2003 the financial sector continued to experience the nightmare of sluggish economic activity, which was primarily underpinned by low levels of investment coupled with soft interest rates,” he said. “These persistent factors,” he continued, “constrained us immensely from offering our members the level of returns on their investment commensurate with popular expectations; suffice it to say we were still able to maintain our interest rates at relative competitive advantage.”

Additionally Aero Services Credit Union will pay out to all shareholders (members) a dividend of  eight percent, based on its performance last year. This dividend however, will be in two phases. The first members will be allowed to have six percent for themselves to do whatever they choose, while the remaining two percent will be tacked on to their shareholdings. Members with outstanding loans will also receive a three percent interest rebate on all interest payments during last year.

In the meantime the Society is making every effort to remove its almost dependency on BWIA for its membership and feasibility studies are currently in progress with regard to expanding its membership base. At the same time, it is exploring other avenues of income generation, the further development of its human resources and the applicability of its bye-laws.