BWIA’s history of financial troubles

Although most people see BWEE as a state-owned entity, the carrier has changed hands over the years, the most recent in 1995 when there was an attempt at privatisation that quickly fell through.

The airline, launched in late 1940 by Captain Lowell Yerex, thrived for many years, providing a vital air link between the islands of the Caribbean during World War II. Routes steadily expanded over the next few years, with the carrier servicing destinations from Miami to Venezuela.

By 1943 BWIA had been transformed into a public liability company. In what was described in one account as a “boardroom coup d’etat”, Yerex was ousted from the airline. Later, in September 1947, BWIA was swallowed up by a British-owned airline, British South American Airways (BSAA).

In July 1949, BSAA was merged with British Overseas Airways Corporation (BOAC). BWIA began operating several Caribbean routes on behalf of BOAC. At the same time, BOAC acquired British Caribbean Airways, a Jamaica-based carrier, and transferred that airline’s Miami and Nassau routes to BWIA.

With technical and financial backing from BOAC, BWIA was reorganised into a highly professional small carrier which, after several years of operating at a loss, was close to breaking even. However, this period of stability was brief. With BWIA’s help, BOAC had built up several routes in the region. The British carrier pulled its support for BWIA, triggering a period of severe cost cutting and redundancies that threatened the airline’s very survival.

An even sterner test was to come during the late 1950s when several countries in the region embarked on the path to Independence. Several of the colonies were going in the direction of a federation and BWIA was considered the natural choice as a federal carrier. BWIA’s 50th anniversary commemorative publication contains the following account of that difficult time: “BOAC understood very well that if a federal carrier emerged it would inherit extremely valuable route rights between the Caribbean, North America and Europe, rights which the new federation would control and which had until then been exploited by BOAC.

“In short, BOAC would lose its dominance of the Caribbean. BWIA was not just a BOAC subsidiary now: it was a serious threat.

“As it turned out, the federation collapsed, and with it the idea of a federal carrier.”

By then, BWIA’s operating losses were mounting. BWIA was at the mercy of its parent company which wanted to cut its losses, including 700 jobs.

To save BWIA from closure, the Trinidad and Tobago Government bought the airline from BOAC for $2.5 million in 1961.

Severely weakened by its affiliations with BSAA and then BOAC, BWIA struggled to remain airborne in the years after that despite several attempts at financial restructuring.

In July 1994, Government entered into a Memorandum of Understanding with The Acker Group and Loeb Partners — the beginning of a move towards privatisation. By February of the following year, majority control of the common stock and management of the airline had been handed over to private investors.

However, that venture was short lived. While the airline recorded occasional financial successes, including a US$9.1 million profit in 1998, periods of profitability were fleeting. Post 9-11, like several other carriers, BWIA suffered huge losses, with revenues declining at a rapid rate. The airline embarked on a series of cost-cutting measures, including making 141 jobs redundant in March 2002. However, problems persisted.

In January of the following year, the airline sought to reduce costs significantly by retrenching 471 employees. A Low Cost Business Model was adopted in an unsuccessful attempt to stop BWIA’s financial decline.

The airline lost close to US$26 million in 2005, with an average monthly loss since then of about US$1 million. In September BWIA CEO Peter Davies announced the decision to shut down the airline following a meeting between several labour union officials representing workers and BWIA’s management. He said BWIA had been unable to generate enough revenue to remain profitable and viable.

“The problem with BWIA, as magnificent as the company is, we have a problem, for every one passenger that’s currently flying with us for all the right or wrong reasons, there’s ten others who simply refuse to fly every day on BWIA and we have to fix that problem,” Davies said.

At year’s end, BWIA makes way for Caribbean Airlines.