Creditors to move in by Tuesday ...Threat to seize BWIA Planes An investigation by Camini Marajh T'dad Express 04.06.03 IF GOVERNMENT does not go to BWIA=92s rescue, again, the airline will not=20 make it past this week. The Sunday Express understands that the beleaguered= =20 national carrier has been given a Tuesday deadline (April 8) to pay up US$3= =20 million worth of outstanding lease payments to its major aircraft lessor,=20 International Lease Finance Corporation (ILFC), or face aircraft seizure. BWIA, which is haemorrhaging US$100,000 a day, is said to be about six=20 weeks behind its monthly payment to ILFC on all six of its Boeing 737-800=20 ILFC-leased airplanes. It is also behind on payments on another ILFC-leased= =20 aircraft, the Airbus 340, which currently flies the London route. The=20 cash-strapped carrier, which barely made its March payroll, has so far been= =20 unable to meet its $50 million severance payout to 617 workers sent home on= =20 January 28 and has been paying only essential bills like aviation fuel and= =20 mandatory maintenance. Last week, the airline=92s president and CEO, Conrad= =20 Aleong, mapped out a rescue plan to take to government to stave off=20 financial collapse and keep BWIA in the air. Aleong admitted in an=20 interview with the Sunday Express that =93the airline may not make it beyond= =20 April 15 without a significant and immediate cash infusion=94. He declined to give numbers, saying only that BWIA was desperately seeking= =20 some more hard cash. And while the Manning Government is yet to make a=20 final decision on requests for another BWIA bail-out, the rescue plan has=20 produced a sort of shaky hope inside the ailing Piarco-based operation=20 which has been swimming in red ink since the 9/11 terror attacks on the=20 United States. =93I believe they have to give us the money,=94 said Aleong,= =20 admitting that the Government was BWIA=92s last hope. He said if government= =20 fails to pull BWIA out of its current cash crunch, =93then the chances are= we=20 go down=94. It may well come to that. Prime Minister Patrick Manning has= gone=20 on record saying that =93bankruptcy is an option=94 for the= partly-privatised=20 BWIA. On Friday, his junior Finance Minister, Ken Valley, told the Sunday=20 Express that the jury was still out on the BWIA case for more bail-out=20 money. A lot will depend on what concessions the private stakeholders were= =20 prepared to make, he said, declaring that =93if the shareholders are not=20 willing to play their part, then there might be only one option available=20 to BWIA at this time. And then, from the ashes, the phoenix will rise=94. Insiders, however, report that the Government has been split over whether=20 and how much help it should give. It recently gave BWIA a US$13 million=20 rescue package. And while both sides concede that the Iraqi war has pushed= =20 the airline industry into the eye of what some are calling the =93perfect=20 economic storm=94, there are those who believe the Aleong management has=20 overstated BWIA=92s problems in hopes of getting some more State assistance.= =20 But the airline, already in the throes of a major restructuring effort=20 involving flight cutbacks, layoffs and demands for savings concessions, has= =20 slammed suggestions that it is trying to get some soft money and a free=20 ride from its majority shareholder. Aleong pointed to the dime-a-dozen industry bankruptcies and liquidations=20 that have followed in the wake of the terror attacks of 9/11 and the US-led= =20 war with Iraq. He said BWIA was well on its way to recording its fourth=20 consecutive profit when 9/11 struck. =93Nine-eleven was the catalyst,=94 he said, adding that the stakes for the= =20 entire industry went up after the fall of the twin towers. BWIA=92s= on-target=20 profit of US$9.2 million in 2001 was obliterated in the space of a few=20 weeks. Aleong said the industry went into a financial tailspin. BWIA was=20 slam-dunked. It got hit not only by increased insurance and safety costs, a= =20 slump in air travel and the global economic slowdown, but by an FAA=20 downgrade to Category 2 status, predatory fare pricing and fresh=20 competition on its home turf from Caribbean Star. Aleong said government=20 also threw a few hurdles and investor-unfriendly policies at the airline,=20 among them, the free-for-all charter competition which cut deep into BWIA=92= s=20 pockets. He estimated monthly losses of about US$800,000. Another government move that has cost the airline plenty was the decision=20 in 2001 to replace the UK-supervised civil aviation authority with a local= =20 regulatory agency without the necessary legislative framework in place. The= =20 airline lost the Atlanta route which it had just added to its schedule and= =20 a lucrative codeshare contract with United Airlines worth some US$350,000 a= =20 month. Higher fuel prices also hit BWIA by as much as US$1 million a month,= =20 according to Aleong. Tighter US security and new, stricter controls in the= =20 issue of visas to Caribbean nationals whittled away market share even=20 further. And then there was what Aleong called the =93self-inflicted=94= wound=20 caused by industrial unrests in the peak July/August period last year.=20 Aleong said the unrest came at the worst possible time and cut deep into an= =20 airline already bleeding cash. He has placed the losses for last year in=20 the region of US$28 million to US$30 million. BWIA case for State bail-out =95 It is by far the single most significant carrier operating in and out of= =20 Piarco, transporting well over 55 per cent of passenger and cargo loads. =95 Second only to American Airlines which handles some 20-25 per cent of= the=20 market. =95 Staff of 1,800. =95 Generated some US$249.3 million in revenues in 2002, of which only 20= per=20 cent originated in the domestic market. =95 Has a local payroll of TT$243.4 million. =95 Paid government TT$40.7 million in PAYE, Health Surcharge and NIS=20 contributions. =95 Collected and paid TT$58.1 million in VAT charges to Government. =95 Conducts business with 320 local companies. *************************************************** The owner of Roger's Trinbago Site/TnTisland.com Roj (Roger James) escape email mailto:ejames@xxxxxxxxx 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.carstt.com TnT Webdirectory: http://search.co.tt *********************************************************