A new airline is born for the Caribbean
ST JOHN'S, Antigua, January 12, 2007 - A second new airline for the Caribbean has been born. It is to be called “LIAT, The Star of the Caribbean" and will start up operation at the crack of dawn on Thursday February 1, 2007 - one month after the other new carrier, Caribbean Airlines, took to the skies.
Following talks on Tuesday and Wednesday in Antigua Caribbean Star agreed to provide a US$35 million to liquidate LIAT's debts and establish the new airline. The three major shareholders of LIAT will guarantee the loan. Barbados will guarantee US$25 million, Antigua & Barbuda will guarantee US$8 million and St. Vincent & the Grenadines US$2 million.
The money is to be repaid once the new airline is placed on the public markets.
The new airline will subsume Caribbean Star taking its owner, Sir Allen Stanford out of the airline business. Also by the end of January, his other carrier, Caribbean Sun Airlines, is shutting down.
Mark Darby LIAT’s CEO said the new airline will operate as a contractor under the LIAT code.
Staff cuts are expected. Last year LIAT postponed its voluntary retrenchment programme after the two airlines agreed to talk. Officials of the airlines told journalists this week that there will not be room for the 1,200 employees but no decision has been taken on the optimal number of the timing of downsizing.
Meanwhile Prime Minister Dr Ralph Gonsalves of St Vincent and the Grenadines also held talks this week with Prime Minister Patrick Manning of Trinidad and Tobago over a working relationship with between Caribbean Airlines, the successor to BWIA, and LIAT. The specific nature of the talks have not been revealed but Prime Minister Owen Arthur of Barbados said his government will not be seriously considering a request from Trinidad and Tobago to put on hold plans for the proposed merger of LIAT and Caribbean Star. He revealed that Caribbean Airlines put forward a proposal to close LIAT and fold it into the Trinidad airline and asked that the negotiations between LIAT and Caribbean Star be put on hold until September.
Passengers holding tickets on either carrier will be valid for the new airline on February 1.
Following is a communiqué issued following the talks.
The Honourable Baldwin Spencer, Prime Minister of Antigua and Barbuda, the Rt. Honourable Owen Arthur, Prime Minister of Barbados and Dr. the Honourable Ralph Gonsalves, Prime Minister of St. Vincent and the Grenadines; the major Government Shareholders in LIAT (1974) Ltd, held meetings in St. John's, Antigua with Sir Allen Stanford, sole shareholder and Chairman of Caribbean Star Airline on 9th January 2007 and with LIAT Chairman and top management on 10th January 2007.
The meeting with Sir Allen Stanford involved clarifications and refinements of proposals placed on the table jointly by the LIAT and Caribbean Star Board and Management teams and were subject to close consideration by both parties. The meeting took place in a spirit of sensitivity and give and take on both sides, but the Prime Ministers were satisfied that Sir Allen understood the critical importance of air transportation to the region and is willing to make suitable accommodation.
The meeting with management covered reports by the three Prime Ministers on the various mandates they accepted at their meeting on 20th December 2006 in Barbados. Progress was achieved as follows:
- The meeting ratified the terms of the MOU signed by Prime Minister Arthur and Sir Allen Stanford;
- The terms of the Letter of Intent circulated on 20th December, 2006 will be further considered by LIAT's legal counsel and the legal departments of the three countries in the coming week with a view to its signature after approval by the Prime Ministers. It is due to be signed by Chairmen Sir Allen Stanford and Jean Holder;
- Progress was reported by Dr. the Hon. Ralph Gonsalves with respect to his mission to Trinidad and Tobago. A resulting proposal by the Hon. Patrick Manning was considered and an amended proposal is being made to Trinidad and Tobago in the context of steps to work towards a long term solution to air transportation issues within CSME;
- Prime Minister, the Hon. Baldwin Spencer updated his colleagues on his further discussions about the Venezuelan Loan and a Plan of Action has been agreed to advance the matter;
- It was confirmed that the commercial agreement between Caribbean Star and LIAT 1974 Ltd involving a new combined schedule will enter into force from 1st February 2007 - leading to enhanced service and connectivity for the region. Additionally, this commercial alliance is expected to facilitate intra-Caribbean travel during Cricket World Cup 2007;
- The Prime Ministers further agreed:
- The next steps, process and time frame for the creation of a new company to be called “LIAT, The Star of the Caribbean";
- On a financial package on excellent terms for liquidating LIAT liabilities;
- Steps to be taken by Zwaig Consultants to negotiate with existing creditors and on the Asset Value of the two carriers;
- Took note of other negotiations that need to be done.
The Prime Ministers have established a team involving the Chairman of LIAT, Dr. Jean Holder, the CEO of Caribbean Star, Mr. Skip Barnett, the CEO of LIAT Mr. Mark Darby, Director of LIAT Mr. Isaac Solomon of St. Vincent and the Grenadines, Advisor to the Antigua and Barbuda Government Dr. Vincent Richards and legal and financial analysts from Barbados as a General Oversight Committee relating to shareholders on all other negotiations involved.
On 27th February 2007, there will be a special meeting of all LIAT shareholders to be held in Antigua and Barbuda to consider the plans for the merger of both carriers.