National airline's share value drops 66 p.c. ...$38M loss for BWIA backers ... but managers claim increase of passengers after September 11 tragedy By Harold Ramoutar TNT Mirror News BWIA'S share value has dropped by 66 per cent ... amounting to a total loss to shareholders of almost $38 million. This has been described as the most disastrous and unprecedented fall of any share value for the entire history of the local stock market. Yet, Chairman Conrad Aleong has refused to disclose this to the public while shareholders are holding their heads and bawling. Unfortunately, like the original private shareholders, public shareholders will also lose their investments. And shockingly enough, contrary to what Aleong has been telling the public, BWIA has actually increased its travellers in the aftermath of the September 11 USA bombing last year. This is what a TnT Mirror investigation has uncovered about the ongoing fiscal disaster at the national airline. A discontented senior official told Mirror last week: "BWIA is bankrupt, and it matters not how much money government pumps into it, the airline will continue to fail. "This situation has raised serious questions about the Securities and Exchange Commission, and its ability to evaluate potential public companies. "In the case of BWIA, what was the justification for the share value, and was there complete disclosure and transparency?" Ironically, of all the shareholders, only Unit Trust was clever enough to escape the loss, and actually made a profit out of the situation. The officials pointed out that BWIA has been in commercial aviation for the past 63 years and, with the exception of three questionable profitable years (1998 to 2000) it has never shown a profit. "In an effort to privatise the airline in 1995, the government of the day absorbed more than $1 billion of BWIA's debt, and gave away some US $30 million of assets to the Acker Group. "In other words, BWIA was debt- free at the end of 1995." In 1996, BWIA under the Acker regime sold shares amounting to $246,960,000 to local and foreign investors including: Land and Co. USA - $2,727,272; Edward Acker USA - $189,205; American International Underwriters Overseas - $5,000,000; Gorden Cain USA - $3,636,364; LOEB Partners Corp USA - $504,046; Nadia Stanfield USA - $239,364; Colonial Life Insurance (CLICO) - $1,000,000; Roytrin - $4,842,500; Government of TnT - $19,209,999; Fleming ANSA - $454,000; NEM (WI) Ltd. - $100,000; Unit Trust Corp - $2,000,000; and National Flour Mills Ltd. - $100,000. "There were 14 other small investors," the informant explained. "It is prudent to note that Unit Trust Corp, excised its option and sold back the shares to Roytrin, and is probably the only investor to have made a profit by way of the exchange rate. "It is also important to note that most of these shareholders have since written off their investment in BWIA. "In 1996, however, in spite of the debt-free position of the airline, and the injection of fresh capital, BWIA generated a substantial financial loss. "It was a confirmation of the serious imbalance of revenue potential, as against uncontrollable operating costs ... the inherent problem that has plagued the airline throughout its existence," he said. The disgruntled officials said on April 17, 1998, in a desperate effort to raise working capital from the shareholders, Aleong wrote them stating that the company's capital stood at US $950,000 (approximately TT $6.2 billion) as at January 31, 1998. He said that short-term borrowing had also grown to US $11.6 million, and the long-term debt stood at US $16.8 million "Aleong assured them that BWIA International Airways Limited was not fiscally insolvent. "And he added that TT laws prevented BWIA from being able to carry on in its then condition, and he did not intend to breach the companies Act. "Not a single shareholder increased their holdings," the source noted. "It wasn't until November 22, 2000, when a prospectus covering 12 million shares at US $1.25 (TT $7.85) was issued, that TT $57 million worth were taken up by mainly local investors and government. "Today, the share value has fallen to TT $2.65 ... a drop of 66 per cent. "It is a known fact that the terms and conditions of the management services contract with CA Consultants Inc. a company owned by the CEO and BWIA, Conrad Aleong for the management of BWIA, was omitted from the prospectus, and no one, including the BWIA Board of Directors, the unions, or government, as the largest shareholder, know the contents. "This, alone, should be ground for legal recourse against BWIA by the public shareholders. "A few weeks ago, Aleong publicly stated that BWIA is unable to meet its debt commitments, and unless the airline receives certain concessions from its employees, the airline would be turned over to the receiver. "In other words, BWIA is once again bankrupt," he insisted. "The upset official added that both Aleong and management have stated that the events of September 11 have attributed to the airline's present predicament. "But BWIA's Pilot Union has categorically denied that September 11 was the cause, and contends that the opposite is true ... that BWIA experienced, and continue to experience, an increase in passenger traffic after September 11, in preference to the US carrier serving Trinidad, for obvious reasons," they said. The senior official, claiming to be 'in-the-know' of the company's operations, added that Aleong's "desperate call for givebacks from the unions 'or else' cannot solve BWIA's problems." "What he fails to realise, is that you cannot take an old airline, with high operations, aircraft leases, and wage costs, and make that airline a low-cost carrier. "BWIA's debts could be close to TT $1 billion at the moment, and it is very obvious that government will have to bail out the airline once again. "BWIA's entire 60-plus years of existence has been dependent on the public purse ... the total of which could very well be already more than $10 billion. "Although we sympathise with the employees who have no control over management policies, we fully blame the present management system of BWIA for the airline's financial problems. "BWIA had an excellent opportunity in 1995 to restructure the airline, to make it lean and mean and viable, but failed to address the known inherent problems," he told Mirror. Another manager added: "There will be the immediate creation of a new, local low-cost carrier, and a strong probability of the return to TnT of some of the major carriers like BA, KLM, Virgin, Air Jamaica, United, and increased services by the Charter Carriers. "In other words, don't for a minute think that local travellers will be subjected to high air fares, or a shortage of seats. "This has been proven time and time again," they concluded. The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (TnT News) http://www.tntmirror.com/ (TnT News) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************