Caribbean Airlines merger coming

The new Liat will be launched on February 1, following successful merger talks between Liat and Caribbean Star this week in Antigua. Caribbean Star has agreed to provide US$35M to liquidate Liat’s debts to establish the new airline. Liats three major shareholders- the governments of Barbados, Antigua and and Barbuda and St Vincent and the Grenadines- have agreed to guarantee the loan.

Barbados will guarantee US$25M, Antigua and Barbuda will guarantee US$8M and St Vincent and the Grenadines will guarantee US$2M. The new Liat will subsume Caribbean Star and the money will be repaid once the new carrier is placed on the public markets.

Meanwhile, Prime Minister Patrick Manning and St Vincent PM Dr Ralph Gonsalves held talks this week about a working relationship between Caribbean Airlines and Liat. Barbados PM Owen Arthur declined to reveal the nature of those talks but said his government would not seriously consider a proposal from TT to halt the merger of Liat and Caribbean Star. Arthur said Caribbean Airlines had made a proposal for Liat to be incorporated into that company and for the Liat-Caribbean Star talks to be postponed to September.

Following talks between Antigua PM Baldwin Spencer, Gonsalves, Arthur and the management of Caribbean Star and Liat in Antigua last week, a statement was released saying that the December 2006 memorandum of understanding between Arthur and Caribbean Star CEO Allen Stanford regarding the merger was ratified. The statement said Gonsalves indicated that progress was made with respect to his mission to TT.

Gonsalves reported that a proposal from Manning, on a working relationship between Caribbean Airlines and Liat, was considered and an amended proposal was being made in the context of addressing long term solutions to regional air transport in the context of the Caribbean Single Market and Economy.

John told Newsday that these developments were not surprising to him and it would not surprise him if merger talks between Caribbean Airlines and the new Liat take place towards the end of this year.

John believes that Government does not maintain majority shareholding in Caribbean Airlines and will open the company to regional investors, once it is firmly on its feet.