$116.8M life-jacket for BWIA

Government yesterday agreed to inject $116.8 million into BWIA so that it could continue to fly. But the Cabinet laid down certain conditions for its assistance to the loss-making airline.

Among those conditions are that the airline review and revise executive compensation contracts as well as review and revise the salaries and allowances of all its staff from April 1, 2003. The airline must also review and revise its policy on free and rebated travel affforded to staff and retirees “to reflect the financial conditions of the airline”. The airline must also  review the management structure and the management team and restructure them “with dispatch and in the shortest possible time”. The other conditions are that the airline increases the productivity of its flight staff through the revision of work and rest regulations, and that the Board of BWIA must also seek to get from the private sector shareholders some commitment as to their own contribution towards the sum of  $116.8 million.

The announcement was made by Dr Lenny Saith at yesterday’s post-Cabinet news conference. Government, which had talked about acquiring more equity in exchange for any funding, is not moving to increase its shareholding at this point. In fact, Saith stressed that Government, does not control the company, and cannot force the Board of Directors to adhere to its conditions. However, he pointed out: “Clearly tomorrow we are not handing over a cheque for $116.8 million, the Ministry (of Finance) would work out with BWIA (saying) ‘you have to do all these things’. There are deadlines for getting it done and then monies would be released as these things are done,” he said. Minister in the Ministry of Finance Ken Valley said that the money is to be provided either in the form of an interest-free loan from government to the airline, or in the form of a Government guaranteed loan, backed by a letter of comfort.

The $116.8 million would be used to pay severance, to pay outstanding amounts to the aircraft leasers of TT $25 million, the US transport taxes of $12 million, and $23 million for working capital.  Saith said the way the money is provided and disbursed would be the subject of discussions between the Ministry of Finance and the airline. Saith said government also planned to bring a consultant on board to go into BWIA and do several things: 1) advise on the transition arrangements for the regional airline and what are the implications for BWIA; 2) determine what funding BWIA would require during this transitional period; 3) recommend the configuration and appropriate operational and management structure, including shareholding, for any new regional airline and 4) outline the operational requirements for positioning Piarco as an air transportation hub. 

The consultant  has to submit a report by June 30 to an inter-ministerial team which is chaired by Saith, and which comprises also Franklin Khan, Ken Valley, Dr Keith Rowley, Conrad Enill, Colm Imbert and the Attorney General. In addition to the consultant, a technical team of government officiers from the Ministries of Trade, Works, Finance, Tourism and Attorney General will also advise the Inter-ministerial team. Government also agreed to support the formation of a regional airline for the Southern and Eastern Caribbean, he said.