BWIA presents new cost cutting plan

BWIA handed in its newest saving plan to Government yesterday in a bid to keep flying.

The new plan could see the cash strapped airline cutting down on international flights, a move that could allow it to save US$300,000 a month in leasing costs by selling back one of its 737s. BWIA has approached Government for help but Government has answered by saying it will only help if the airline presents a viable survival plan.

The airline owes about US$3 million in lease payments on its aircraft but leasing company International Lease Finance Corp (ILFC) has granted an extension. The airline, though, continues to rack up expenses as it either puts off payments or makes them in part. The airline also needs help to pay severance to the majority of the 617 employees retrenched in January. While BWIA has begun to pay ex-employees who are owed $25,000 or less in severance, those who are owed more are yet to receive their payment. Communications Director Clint Williams said BWIA may also have to cut salaries to cut costs further.

It is now up to Government to decide whether the plan is viable or not. The last time Government agreed to help out BWIA, late last year, it said the airline had to first come up with a plan to cut US$1 million in costs a month. Trade and Industry Minister Ken Valley said last week that BWIA’s other shareholders also have to make an input if the airline is to survive. Valley also said Government wants equity in exchange for any help it gives.

BWIA has been losing about $100,000 a day in the past few weeks. The airline has blamed the current situation on the Iraq War which has forced a five percent drop in load. Williams said yesterday over the past few weeks cancellations have increased whenever deadlines have been set for the company’s future. “Every time someone says the airline has 24 hours to live we lose bookings,” he said. “The situation is completely fluid. People have said we don’t seem to have our act together but that is exactly how the market is behaving.” Williams said employees will continue to be paid. “We have consistently paid salaries all along. There’s no reason why we won’t continue to do that now,” he said. Employees and ex-employees were due to meet yesterday to discuss their future.