Antigua and Barbuda has written to the Caribbean Development Bank (CDB), seeking a loan to buy two LIAT aircraft, as St. John’s begins the process of trying to reorganize the airline.
Prime Minister Gaston Browne said Antigua’s request was made after Barbados and St. Vincent and the Grenadines wrote to the CDB, seeking permission to sell the three planes owned by LIAT’s three largest shareholders. The three planes were purchased with a loan from the CDB.
“The Prime Minister of Barbados Mia Mottley and Prime Minister [Ralph] Gonsalves [of St. Vincent and the Grenadines], they would have written to the Caribbean Development Bank requesting that they sell the three planes and to apply the proceeds, on a proportional basis, in reducing their re-fleeting loan with the Caribbean Development Bank,” Prime Minister Browne has revealed.
“But Caribbean Development Bank has indicated that in order for them to do that, they will have to call the re-fleeting loan; and because there are certain cross guarantees as well, it means that the other LIAT loans as well, they will be in cross default and they would have to call those.”
Prime Minister Browne noted that if the CDB calls all of those loans, it would create a fundamental problem for all three shareholding governments.
He said this is one of the issues that his government knew could have become a problem.
“In the case of Antigua and Barbuda, it would mean that we would have to find about US$25 million, which clearly we don’t have,” Browne said.
“We have since written to the Caribbean Development Bank to ask them if they could look at the possibility of extending a certain amount of money to Antigua and Barbuda so that we can payout St Vincent and the Grenadines and Barbados for the two planes that they would have owned out of the three.
“So, they will get back to us. I’m not too sure if they have the appetite for that but at least we’re trying to see if we can step up with some additional borrowings and to try and resolve the issue amicably,” Browne added.
Discussions with other prospective shareholders
Meanwhile, Prime Minister Browne said Antigua and Barbuda is having discussions with other prospective shareholders, but he admitted it is not the best time to be having discussions about shareholding in an airline.
He cited the COVID-19 pandemic, and the fact that the airline industry is practically, perhaps the hardest hit of all industries globally, and the recovery could be protracted.
“It’s expected that it’s going to take maybe two years, maybe up to three years before they get back to 2019 sales or revenue,” he said.
“In the case of LIAT, our projections are based on about 50 per cent of the revenue of 2019, and even if it goes down slightly, I still think we can break even. But again, LIAT is so important to the economy of Antigua and Barbuda that we have to go the extra mile to salvage it.
“Within 90 days, which is the estimated timeline for getting LIAT back into the air, we believe by then all of the countries within the Caribbean would have reopened their borders and we will have more people flying,” Browne said.
This article was first published by 268 TODAY.