Executives hope to make more money with less staff (BWEE News) By JUHEL BROWNE Four years after it seemed on the verge of soaring to financial heights=20 after making a net profit of US$9 million in 1998, BWIA has now taken the=20 shape of a low-cost carrier in an attempt to rebound from a multi-million=20 dollar loss. Other such carriers, like Jet Blue in the United States, have= =20 used similar low-cost models with great success. The BWIA management said= =20 in 2002 alone, the airline lost US$28.9 million (TT$182 million). Yet, the= =20 new BWIA expects to make a profit this year. The question is how =97=20 especially when the global airline industry does not expect a profit=20 recovery until 2004. In addition to its retrenchment, outsourcing and consolidation initiatives,= =20 BWIA also hopes to increase its EPS by beginning new routes to Cuba, Costa= =20 Rica and the Dominican Republic by the end of April. The answer, the BWIA=20 management noted in its 2003 business plan =93The New Business Model=94, may= =20 lie in the past. =93In short, BWIA needs to look more like the 1998 formula= =20 when it achieved the highest level of profitability in its history,=20 US$9.037 million (TT$56.697 million). =93Except that this time, as pointed= =20 out by the experts, productivity must be addressed,=94 said the plan which= =20 was published in the dailies last Wednesday . The night before, BWIA chairman Lawrence Duprey and CEO Conrad Aleong=20 unveiled the long-awaited plan on a live telecast from the Chamber of=20 Commerce building, Westmoorings. Earlier that same day, the BWIA management= =20 retrenched 615 of its employees and began outsourcing of its maintenance,=20 ramp and duty free operations. It also cancelled its frequent flyer= programme. The new business plan=92s number one goal is getting its earnings per share= =96=20 which had been grounded in the last three years =96 up to the skies as an=20 incentive for long-suffering investors. Last year, BWIA=92s EPS was minus=20 US$0.609 cents. =93An EPS of US$0.10 cents is the 2003 objective. Assuming= an=20 eight times multiple, this could translate to a share price of US$0.80=20 cents (TT $5.04 cents) by the end of the 2003 fiscal year. This then sets=20 the base for regaining the issue price of US$1.25 (TT7.85) in the following= =20 year, 2004,=94 the plan said. =93EPS is therefore, the top priority.=94Last= =20 December, an undisclosed group of BWIA shareholders filed legal action in=20 an attempt to regain their original investments when BWIA offered shares to= =20 the public in 2000 at US$1.25 ($7.85) per share. None of the investors in=20 BWIA, even Aleong, received any returns on their investment. At present,=20 BWIA is trading on the local stock exchange at TT$2.25 per share. Last=20 Tuesday, both Aleong and Duprey said the airline must begin yielding a=20 return for its investors. Ironically, those investors include most of the airline=92s employees, even= =20 the 617 who will have to look for a new job on April 1. The management at BWIA decided to cut 617 jobs and save US$800,000 a month= =20 in employee costs. Trade unions at BWIA said it was a move the airline=92s= =20 executives planned to make since 2002. =93We knew in 1998 that the airline= =20 was overstaffed but we worked with it. This is no longer possible if we are= =20 to save the majority. Eighteen hundred of the 2400 jobs will be saved under= =20 the new business model,=94 said Aleong. Hours earlier at a news conference,= =20 president of the Airline Superintendents Association, Theo Oliver, said the= =20 BWIA executives should be held accountable to all of its shareholders,=20 including the retrenched employees. =93We represent 15.5 per cent=20 shareholdings of the organisation somewhere along the line they refuse to=20 understand that the employees are shareholders in this company,=94 Oliver=20 said. One of the key elements in the plan is reducing BWIA=92s operating=20 expenses or cost per seat mile to US$0.08 cents. While this will still be=20 higher than the cost per seat mile of other carriers like SouthWest=20 Airlines which stands at US$0.075, the BWIA executives expect this will put= =20 them in a better position to make profits.But to this, they noted, the=20 staff count also had to drop. =93This low-cost target is best achieved by=20 operating the fleet at a higher daily utilisation, and handling more=20 passengers, cargo and aircraft with fewer human resources,=94 said the=20 business plan. The staff factor BWIA chief executive officer Conrad Aleong said the decision to cut the=20 airline=92s staff was not an easy one but had to be done given the=20 circumstances. Ironically, in its 2000 Prospectus, meant to attract=20 potential investors when BWIA issued its Initial Public Offering, the=20 airline stressed the need for investing in its staff. =93The Company=92s=20 management recognises that in order to continue to motivate the work force= =20 and fully transform the Company into a high performing, customer driven=20 airline there must be continuous investment in its human capital. =93Externa= l=20 training in specialised skills and in-house education are among the highest= =20 corporate priorities. =93Pilots receive initial flight training directly= from=20 the manufacturer in addition to refresher simulator training every six=20 months. =93In-flight crew are trained at the Company=92s Piarco base.=20 Maintenance and engineering staff receive specialist training as the=20 various authorisation licenses are required by the DCA (Director of Civil=20 Aviation) Training in all other areas is continually reviewed and the=20 necessary training is provided as required both with respect to the=20 technical and customer service aspects of the job.=94 *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@escape.ca Trinbago site: www.tntisland.com Carib Brass Ctn site www.tntisland.com/caribbeanbrassconnection/ Steel Expressions www.mts.net/~ejames/se/ Site of the Week: http://www.caribscape.com/tamnakthai/ TnT Webdirectory: http://search.co.tt *********************************************************