Fri 22nd Mar 2019
In the second week of March 2019, it was reported that LIAT was in serious financial difficulties, requiring an injection of a minimum of five million US dollars in order to keep flying. Reporters were told that LIAT has enough ‘cash to last for 10 days’.
It seems like LIAT has been in crisis for over 60 years, even though they have a virtual monopoly. Time after time, money has been pumped in to this failing company, but solutions to make it a viable business are never found. One can only blame the board of directors and the major shareholders for failing to find a proper solution over these past decades of troubled financial times.
LIAT has a debt of tens of millions of dollars at the Caribbean Development Bank too. LIAT is in utter financial chaos.
Tens of millions of taxpayers’ money has been wasted on LIAT, whilst not adjusting its failing structure and ways of working. LIAT must publish its financial statements to the public, so it can show the public where all this taxpayers’ money has gone. Are there poor financial systems in LIAT or is it just the incompetence of the board of directors and major shareholders?
Warrant Officer Ivan O’Neal BSc (hons) MSc, MBA strongly believes that LIAT’s problem is not money, but lack of competence in the board of directors in allowing LIAT to overtrade, that is to say, allowing greater running costs than income.
It is stupid to suggest pumping US$152 million in to a restructuring plan for LIAT. It is quite apparent that LIAT urgently needs to restructure –but at minimal cost – and update its financial processes, controls and regulations to become a strong going concern.
For example, LIAT often flies aircrafts that are at about 50 per cent capacity or lower. This is not a viable way to make it a profitable company. LIAT’s routes need to be financially assessed to see under what conditions they can become viable without being subsidised. Perhaps certain routes need to be flown less frequently or with smaller aircraft or in conjunction with other routes only.
It was said that some destination countries may have to guarantee a minimum revenue stream to the airline or the airline will cease to fly on those routes. NO! Governments must stop subsidising LIAT operations so the financial gaps can clearly be seen, monitored and rectified.
Providing minimum revenue streams is a stupid idea and does not solve the financial problems of LIAT, but only masks them. Enough of these ‘sticking plaster’ remedies. A proper, financially sustainable solution is needed.
The financial failure of LIAT over the past decades shows that shareholders and the board of directors must stop sticking their head in the sand. They have continually failed to tackle the real problems within LIAT.
LIAT urgently needs a detailed SWOT analysis: (a) What are LIAT’s strengths (b) What are LIAT’s weaknesses (c) What are LIAT’s opportunities, and (d) what are LIAT’s threats. It is always prudent to have a daily running balance on all accounts within the organisation, coupled with payments needing authorisation by two or more people. LIAT also needs to have competent daily reconciled accounting. When accounts are not reconciled major financial problems can arise and go unnoticed for a long time.
Financial breakeven points must be found in all aspects of LIAT’s ground and flight operations. LIAT must be prevented from falling into the red financially. Initially, though, a critical financial analysis is needed of LIAT’s current operations to pinpoint the exact financial problems.
Competent action is needed to end the 60 year continual cycle of LIAT being in a financial crisis.