It was the best of BWIA, it was the worst of BWIA By Sherry Ann Singh (Trinidad Guardian) As fortunes go, national carrier BWIA has seen both extremes in the last few years. In fact, Charles Dickens' famous opening lines, "It was the best of times; it was the worst of times," may serve an apt description of BWIA's experience. During the last three years, the financially beleaguered airline made its first profit in its 61 year history; expanded its service to include key international destinations; upgraded its fleet with six Boeing 737 next generation aircraft; and was eventually listed on the local stock exchange. But even with all of those successes to boast of, BWIA has found itself in an extremely tenuous situation. The turnaround engineered by chief executive Conrad Aleong is under threat. Forget growth, it's now a matter of survival as BWIA attempts to save itself from skies which have become ominous after September 11. And it's unlikely to be a case of third time lucky with BWIA since Aleong has already hinted the profitability of the last two financial years may be absent this time around. In fact, Aleong said a $46.8 million profit declared up to the third quarter last year had been eroded by November. A disappointing Christmas season was unlikely to make a difference in the airline's bottom line. That's why BWIA can no longer avoid the inevitable. Later this week it is expected to announce staff cutbacks as part of an overall restructuring programme. This follows a reduction in flights, cutting travel agents' commissions by three per cent and the removal of access to its sabre booking system on its Tobago route. Aleong has defended the airline's tough decisions saying they were a matter of survival. "It's terrible. We were growing and feeling quite good about where we were going when suddenly the whole world changed. We were hoping there'd be a recovery in four to five months and we would not have to lay off anybody, but that has not occurred," he said. Aleong has said management staff will be the first to go at the top heavy airline, but no department will be spared. Of course all of this has been encountered by fierce opposition by the unions representing BWIA's 2,500 plus workers. Stockbrokers have their own concerns about BWIA's performance, but say if a leaner more efficient operation is what it takes to make BWIA profitable, then retrenchment is not such a bad move. "At the end of the day BWIA, like most others in that sector, have got to do some kind of downsizing," stated Kathleen Dhannyram, managing director, Reliance Stockbrokers. This view is shared by Subhas Ramkhelawan, managing director of Bourse Securities. He said BWIA had held off as long as it could in an industry where some airlines were on the verge of bankruptcy and a major player like British Airways had to cut a quarter of its workforce. That aside, both agree there are other issues which may be unsettling to BWIA shareholders. Dhannyram noted that the company did not raise the money intended from its Initial Public Offering of shares and therefore could not proceed with plans outlined in its prospectus. The airline fell short of its $95 million target, raising just $57 million from the offering which opened on December 4, 2000 three months later than planned. The closeness to the 2000 general election, the state of stock markets world-wide and the preoccupation with the Christmas season were cited as reasons 40 per cent of the 12 million shares up for sale remained un-subscribed. But Dhannyram says it was unfair to shareholders for BWIA to go through with such an issue. She said the share price has been moving downwards from day one, indicating that no one wants it beyond those who purchased it initially. BWIA shares opened on $7.85 and are now down to $2.80. The latest developments at BWIA, Ramkhelawan says, will just be one more blow that shareholders have had to suffer since the IPO. In BWIA's defence, Dhannyram acknowledges there are greater risks associated with investing in an airline which people need to be aware of. "The wrong people bought the shares. They hoped to make money in the very short term when they should have been buying based on a long term investment." She said the onus was on BWIA to ensure its shareholders were fully aware of what they were getting into. As the watchdogs for the industry, another industry source says the Securities Exchange Commission should have demanded that BWIA explain how it intended to spend the money raised. "The SEC is well within its right since they have an obligation to ensure the company will actually do what was promised in the prospectus. They need to get BWIA to explain how they are to meet their projections," the source said. Meanwhile, BWIA says it is in the process of wrapping up a deal for the purchase of two new A340-300 aircraft to service its London route; a planned re-entry into Germany; and their expansion into South America next year. Aleong said it both instances the airline was finalising a lease with an option to purchase the bigger, more fuel efficient aircraft to help it recapture some lost market share. Still, the airline remains undercapitalised says Ramkhelawan, so BWIA shareholders had better be prepared to be with it for the long haul. Being over leveraged, having limited borrowing options, and uncertain of a successful return to the market, he says what BWIA now faces is a serious management challenge. 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