Bwee’s painful journey

BWIA’s share price which dropped to an uncomfortable all time low of 22 cents early last week on the Trinidad and Tobago Stock Exchange had by Friday showed a modest upward movement to 26 cents a share. The hardly discernible climb may have been influenced by the announcement last week of an improvement in the airline’s 2004 January-June after tax position as against that of last year, and by the possible belief by some investors that Government’s return as a majority shareholder could see BWIA attracting a better share price. BWIA’s announcement a few days ago that its after tax loss position for January-June 2004 had been US$6.5 million represented a more than halving of last year’s after tax loss of US$14.6 million. Whether the reduction can be described as a hopeful development, given the difficult financial situation of several of the world’s leading airlines following on September 11, or a reason to be less uncomfortable is debatable.

Nonetheless, last week’s increase of four cents on the BWIA share price which still left the price at an uncomfortable low was the first significant upward movement since the airline’s IPO was listed on the Stock Exchange in February of 2001 at $7.85 a share and within five weeks had taken a nose dive falling to $3.50 a share. The events of September 9, 2001 merely spurred on the fall and when earlier this year shareholders, for the most part, did not take up BWIA’s rights issue, Government which had privatised the airline on February 22, 1995, after owning it since 1961, became the principal shareholder. Of interest is that Lawrence Duprey, Chairman of BWIA, and who has been credited with turning around several companies acquired by C L Financial, of which he is head, found it virtually impossible, given the constraints imposed by 9/11, to place the airline on a growth path. 

Indeed, with several airline majors experiencing balance sheets in the red thanks to 9/11 and the diminished interest in airline travel it triggered, it does not appear possible that Duprey or anyone else in the foreseeable future will be able to effect a turnaround with BWIA, and it may be time for him to reconsider his position at the airline. Government, however reluctantly, appears once again in charge of the cockpit at BWIA, and it is a mere matter of time before this is acknowledged officially. It has been a painful journey for the airline, which in the late 1990s and 2000 had been credited with being in a profit position, after having lost hundreds of millions as a Government-owned airline and yet further since the events of 9/11. We have to be realistic and appreciate that it may be a long time again before the national airline, troubled by 9/11, the flood of charters by rivals and  sharply increased fuel costs as a result of the price rise in international crude, may come within even a whisper of profitability.