BRIDGETOWN, Barbados, Thursday June 6, 2019 – If negotiations with the Antigua and Barbuda government go well, Barbados will, for the first time in a while, not be the single largest shareholder of the financially-troubled regional airline LIAT.
Prime Minister Mia Mottley has confirmed, weeks after initial disclosures to the public by her Antiguan counterpart Gaston Browne, that Barbados will sell most of its 49.4 per cent stake to the twin-island nation. She did not say how many of the shares would be given up, but Browne had already indicated that Barbados had agreed to sell all but ten per cent of its shares.
Mottley said that given that Barbados’ economic situation [the island is in the midst of an economic recovery and transformation programme supported by the International Monetary Fund], the government could not continue supporting LIAT in the way it has thus far.
Barbados went from having minority shareholding in LIAT of 8.19 per cent prior to 2003, to becoming the airline’s largest single shareholder. Its stake was even higher in 2013 than it is now, with the country having 51 per cent at that point.
But Mottley said LIAT’s current model is not an attractive one, and significant restructuring is needed, including a new model of governance, a new financial model and a new operational model.
“There is only so much that Barbados can responsibly do at this time given our current circumstances….Therefore, notwithstanding our absolute commitment to regional air travel, given the fact that studies have recommended a different model of restructuring for LIAT and given the inability of the Government of Barbados to do for LIAT in the next five to ten years what we have done for LIAT in the last five to ten years when we moved significantly to assume major shareholder responsibilities, we have taken the determination and decision as a Cabinet that it is time for us to step back while at the same time allowing other governments to continue with their proposals to restructure LIAT in the way which they have determined,” she told Parliament on Tuesday night.
“We have accepted an offer from a sister Caribbean state, Antigua and Barbuda, to re-enter into negotiations with them to see whether a deal could be concluded with respect to Antigua and Barbuda taking up our shares in exchange for them taking up our responsibilities as a shareholder within the context of LIAT.
“This would require negotiations on the part of both countries and therefore we will be writing Prime Minister Browne to indicate that just as he has established a negotiating team, the Government of Barbados will establish a negotiating team that will meet with his negotiating team to settle the terms if we can, with respect to the conclusion of the transfer of the shareholding,” she added, noting that Attorney General Dale Marshall would lead the Barbados team.
However, Prime Minister Mottley stressed that Barbados was not giving up on the Antigua-based carrier and would still serve as a minority shareholder and would provide a revenue guarantee on particular routes.
“We will provide a minimum revenue guarantee on any route that is…unprofitable, recognizing however that the majority of routes that Barbados is involved in, is in fact profitable with LIAT. And it is against this background, our commitment continues such, that within the last few weeks the government of Barbados would have sent a further BDS$1 million (US$500,000) to LIAT and would also have satisfied our commitments to the Caribbean Development Bank with respect to the re-fleeting of LIAT,” she added.
In addition to Barbados and Antigua and Barbuda, the shareholder governments of LIAT are St Vincent and the Grenadines, Dominica and Grenada which own about 95 per cent. Private shareholders and staff own the remaining stake in the airline.