LIAT, Caribbean Star look at possible merger

Talks are underway between Caribbean Star and LIAT on a potential merger at a time when the regional airline industry is experiencing another bout of financial turbulence.

The talks were apparently initiated by Chairman of Caribbean Star Airlines, Allen Stanford, who telephoned Vincentian Prime Minister Dr Ralph Gonsalves, who has responsibility for air transport in the CARICOM quasi Cabinet.{{more}}

Gonsalves in turn gave the nod to Chairman of LIAT Dr Jean Holder to commence talks. At the same time he briefed prime ministers Owen Arthur of Barbados and Baldwin Spencer of Antigua of Barbuda – the two countries that have the greatest stakes in the regional airline industry.

Despite the talks, LIAT is going ahead with cutting 150 of its staff at month end as it reduces the number of flights to several destinations in order to arrest its US$180 million in debt.

“We are flying to too many places at one time, we have too much capacity and we need to take on a rational view of the market,” Chief Executive Officer, Mark Darby, told SEARCHLIGHT Business in a telephone interview from his Antigua office. The downsizing will affect mainly pilots and cabin crew as well as operations staff predominantly in Antigua and Barbuda as well as in Barbados. Reports from St Kitts/Nevis suggest that “one or two” staff members would be retrenched.

The move would have no effect on St Vincent and the Grenadines.

“This is a very painful and expensive process, we would rather ask people to volunteer and it’s better than asking people to go. Coming into this business a couple months ago I was to have LIAT on a commercial footing and that is what exactly I am doing,” Darby told SEARCHLIGHT Business.

Staff cuts, a fresh marketing drive, improved punctuality and cost-cutting measures along with changes in routes are all part of Darby’s restructuring plans to keep the budget carrier afloat.

“Punctuality in flights was less than 50 per cent when I arrived, now it’s regularly around 70 per cent,” Darby said.

Talks continue on a grant of US$7.5 million from Venezuela as well as a US$20 million loan to ease its cash flow situation.

In order to “optimize costs to insure fast-track growth,” Caribbean Sun will reorganize its flight operations, discontinuing or reducing the frequency of several flights between October and January, the carrier’s president and CEO, Skip Barnette, said.

The Caribbean Sun airline is setting for certain northern Caribbean destinations from October. The sister carrier of Caribbean Star will suspend service to and from St Eustatius, discontinue flights between St Kitts and San Juan and reduce its frequency to and from St Maarten and to and from Tortola.

From January 2007, it will no longer serve Tortola from San Juan and will reduce its flights along its San Juan-Antigua-Trinidad route.

“We’re taking a couple of small steps backward to make it easier to take a giant leap forward in the future,” CEO, Skip Barnette, said.

Air Jamaica has also cut back on service to certain destinations and more recently BWIA has announced a makeover by closing the present company and starting a new airline in January.