Govt throws BWIA $40M lifeline

GOVERNMENT yesterday threw cash-strapped BWIA a crucial lifeline by injecting US$10 million into BWIA and converting some US$30 million of the airline’s debt into equity. Addressing the post-Cabinet news conference at Whitehall, Trade and Industry Minister Ken Valley said: “BWIA suffered losses over the last few years which had the effect of eroding its equity capital and the Government has agreed to restructure the balance sheet by converting some of the debt on the balance sheet into equity and in addition provide up to US$10 million. In the total package, we are underwriting US$40 million. US$30 million of that will be the conversion of debt to equity and further US$10 million will be new money going into BWIA.”

Valley said SH and E International Air Transport Consultancy has been reviewing BWIA’s operations over the last few months and “they are pleased so far with what they see. BWIA has been doing relatively well, it has been doing better than budget,” the Minister stated. The Minister added that BWIA has been meeting its US$2.5 million payments to International Finance Lessors Corporation (ILFC) (which owns BWIA’s aircraft). Valley said he will receive an interim report from SH and E in two weeks and the final report is due by the end of May. The Minister said based on that report, there may be a need for Government “to provide the solvency for the airline. There may very well be a requirement on the operation.

“It all depends on what the shareholders want to do. We just have to wait and see what happens with the other shareholders. We are getting to the test. Either other shareholders will come up or they won’t,” Valley said. He hinted that Government will ask Virgin Atlantic chairman Sir Richard Branson to invest in BWIA when Branson comes to TT for a conference later this year. The Minister indicated that a merger between BWIA and Liat to form a regional airline was onstream to meet its July 1 deadline and Government had provided a loan of EC$ 17 million to regional shareholder governments to keep Liat operational. He added that the advice of SH and E will be critical to whether or not the merger takes place.

Valley said regardless of what happens to BWIA, the national airline was not the focal point in TT’s efforts to become the site of the Free Trade Area of the Americas (FTAA) Secretariat or the gateway to South America. “Whether we get the headquarters or not, BWIA in my opinion is strategic. The consultants we have are also looking at what is required to position as a hub into and out of South America. What you can say, is that in our quest to integrate the economy of TT into the Latin American economy, BWIA or an airline is important,” the Minister explained.