From the Antigua Sun, 15 July, 2006
By Patricia Campbell
Cash strapped regional airline LIAT will shortly be receiving a major boost in funding from the government of Antigua & Barbuda. Prime Minister Baldwin Spencer has announced that Antigua & Barbuda will be injecting an additional US$20 million dollars into the airline, the result of a deal brokered with Venezuelan President Hugo Chavez.
PM Spencer travelled to Caracas, Venezuela earlier this week, with a delegation including Tourism and Civil Aviation Minister Harold Lovell and Minister of Housing and Social Transformation Hilson Baptiste. The delegation brokered a deal for the government of Venezuela to provide the US$20 million in a mixture of a grant and loan
The prime minister said that how much of the amount will be a loan to the government has not been decided, but the details of the agreement will be worked out over the next week or two. A working group has been established to determine how the new capital will be used and a team from Venezuela will travel to Antigua within the next two weeks to meet with LIAT officials on its business plan and the best utilisation of the US$20 million.
PM Spencer said that the deal “would allow LIAT to continue to be the regional air-bridge that facilitates regional integration and trade.” He said that the government views the airline as an important element of its regional development strategy and wants to make sure that it becomes financially sound.
The cash injection will significantly strengthen Antigua & Barbuda’s interest in the airline, making the government the majority shareholder in LIAT. “The reality is that right now LIAT needs an injection of serious capital,” PM Spencer said. “”¦Antigua and Barbuda has a serious interest in LIAT and we felt that whatever we could do to ensure that LIAT has the required financing at this time to get it to a point where it could become more commercialised is what we needed to do and that is the motivation for the decision”¦ to get funding for LIAT.”
At a recent press conference held by LIAT executives, Chairman of the Board Dr. Jean Holder and Chief Financial Officer Ronald Blais said that the airline’s aim is to move away from financing and towards private investment. However, the prime minister said that while this would be the ideal scenario, it does not reflect the reality of the airline’s financial predicament.
Minister Lovell made the point that the injection could help to pave the way for attracting private investors in the future. “What we are doing here, will serve to strengthen confidence in LIAT and at the end of the day, investment is about confidence. (This) will make the climate for investment by the private sector even more attractive.”