LIAT THREADS OWN LIFELINE

"We are at the stage that customer demand and the successful restructuring of our finances to date are now conducive to a step change in our plans to move the business forward.

"We have taken this opportunity to renew all aspects of our business and to commence stripping pit complexities and targeting cost savings," he said during a press conference at Sandals Hotel in Antigua last week.

As a result, Liat will now be a low cost airline, he added.

Low cost, according to airline officials, now means E-ticketing, implementing new technology, hiring a change management specialist, more non-stop services as well as flying to new places.

It also involves the purchasing of new aircraft and increased frequency on high volume routes. "I am happy to report that our financial and operational restructuring plans are progressing satisfactorily," said Cullen as he read from his prepared text.

He said that the airline had restructured its debt with many of its major suppliers and banks and renewed contracts with their unions.

Six months ago, there was a capital injection of EC$44m from the airline’s shareholders: Antigua, St Vincent and the Grenadines, TT and Barbados.

Cullen said their commercial and financial results continue to improve, noting that after a record summer, the airline had strengthened its position as market leader.

Current performance was 40 percent better than 2004 and while they are predicting a profitable 2006 much work needs to be done before the end of this year.

It was Liat Chief Financial Officer, Roland Blais, who put things in perspective. He said during the period 2004-2005, the airline’s losses had declined by 40 percent.

In an interview after, he said Liat had issued a EC$63.5M bond, of which the company received half. The other half was put into a sinking fund to earn interest over the next ten years "in order that there would be enough funds so that the bond can be repurchased at the end of ten years without going any further into the coffers of the company," he said.

At the time, the bond was fully subscribed and was done through First Caribbean Bank. Asked whether there was any possibility of placing another bond to raise more capital, he said he did not think so.

He said as far as he was concerned, the bond was basically funded, noting too that the airline has a EC$70m debt with the Canadian Development Bank (CDB) which is being renegoiated.

"If we go according to budget and the profits come out, then we will take a look at an IPO or something of this nature," he said.

Cullen, asked about the IPO, said the issue had been raised before. He noted though that for an IPO to get the green light, the company would have to show a record of profit and this was the first step in the way forward.

Blais said for an IPO to be issued the company had to show profits for two years even three, stressing that this would depend on the shareholder governments.

He said when both debts (the CDB and bond) are taken out of the picture, it put Liat on a surer footing.

During the press conference, the question of leasing rather than owning the aircraft came up. Blais said given the current climate it was difficult to purchase.

"You need money to make money," he told reporters, noting that Liat did not have money to do leasing arrangements right now.

According to his calculations, it was not feasible to lease right now. "In the industry now, more and more lessors are demanding more of the lessees," he said.