New business plan could fly LIAT into the black by 2013: chief executive
December 11, 2012

New business plan could fly LIAT into the black by 2013: chief executive

LIAT on Friday unveiled a new business plan the company says provides “a road map” to turn around its fortunes “in the shortest possible time”.{{more}}

The airline is projected to reverse its current losses and record a two per cent profit — EC$7 million — in 2013.

More than nine per cent profit is projected in subsequent years and by 2017, profits in excess of EC$40 million are projected, Ian A. Brunton, LIAT’s chief executive officer, announced in Antigua and Barbuda.

LIAT lost EC$2.8 million in 2008, recorded a profit of EC$8.9 million in 2009, lost EC$20.2 million in 2010, and EC$43 million in 2011.

Brunton, who became LIAT’s chief executive in August, told Caribbean journalists that greater revenues in the core network, resulting from improved capacity management, would drive the financial turnaround.

Increased revenue from route expansion, lower direct maintenance cost — due to the introduction of new aircraft, and a reduction in direct operating cost — due to a reduced and tighter schedule, are expected to contribute.

The plan includes reducing to six the “overly large” executive management team of 13.

The airline will also reduce its schedule on poor performing routes in an effort to improve profitability by increasing overall load factor to an average of 75 per cent, therefore reducing its daily flights.

“… we talk about the 39 unprofitable social routes we do almost as a charity, because it is not routes that we make any money out of,” Brunton said, adding that these flights service eight destinations.

He did not disclose the flights that will be cut from the airline’s schedule, saying that doing so would be unfair to the destinations affected.

He, however, said that a year-on-year comparison of the airline’s schedule would reveal the flights dropped.

“And this is a cardinal principle that we are saying now, that LIAT cannot afford to go on being a charity and losing the kind of money that we have to go back to shareholders, eventually the taxpayers, to support LIAT. That is not fair to the taxpayers, it is not fair to the shareholders,” he said.

The new business plan also hinges on a complete fleet change for the airline, whose planes are an average of 19 years old, with the newest plane being about 15 years, and the oldest 19 years.

The airline plans to have more efficient scheduling, saying that by increasing its targeted load factor to 75 per cent, from the current 54 per cent, the efficiency of the network is increased by over 30 per cent.

The plan further says that LIAT is aligning its human resource practises to its business strategy through the creation of cultural awareness through introduction of a “brand camp”.

There will also be renewed focus on recruitment, on-boarding orientation and succession planning processes and programmes to ensure the “right fit” in position, Brunton said.

And, as LIAT eyes new destinations in Haiti, Panama, Jamaica, Aruba, and Punta Cana, fleet renewal is a major focus, as the aging fleet consumes a chunk of the airline’s budget.

Brunton said the projections show strong revenues and significant bottom line improvement.

Meanshile, chair of LIAT Dr Jean Holder acknowledged the airline failing, but said he believes the company needs a chance.

“LIAT knows that it is not the most efficient airline in the world; the CEO has been given a mandate and he has to effect change. Change is never easy in the airline business. It’s one of the most difficult things to do.

“We have a footprint in 21 countries; people don’t understand the cost of running an organisation which has to have branches in 21 countries … So, we have this incredible mandate, which is extraordinarily difficult. We get very little sympathy for the effort that we make…” Holder said.

The airline’s major shareholders are the governments of Barbados (49 per cent), Antigua and Barbuda (32 per cent) and St Vincent and the Grenadines (11 per cent). (