BWIA board blanks govt ...demands Manning's bailout plan in writing Part IV of an investigation by CAMINI MARAJH Express 04.27.03 CASH-STRAPPED national flag carrier BWIA may be a pre-stall shudder away from going into a nosedive but the board of directors see no need to "kowtow" to Government's cash for concessions offer. One week after Government stepped in with a rescue package of cash and conditionalities to keep the airline aloft, the BWIA board of directors, at a "do-or-die" meeting at Sunjet House, Port of Spain on Friday, determined that they were unable to respond to a Government directive for a review of the Conrad Aleong-led management team since they had received no written communication from the Patrick Manning Cabinet. With creditors standing in the wings and early figures showing a US$4.96 million loss for the first two months of this year, insiders report that the board adjourned the meeting in just under an hour's time, after concluding that they had no clear guideline of the State's demands, announced at a post-Cabinet news conference on April 17. Insiders are also reporting as "significant" the absence of board chairman and key Aleong supporter, Lawrence Duprey, who left the island suddenly on Thursday for a meeting with officials of the Barbados Central Bank. The Government has made it clear, on more than one occasion, that it would not release any new money to the financially-distressed airline until its demands for a management review, increased productivity and more pay cuts and less accommodating work rules were met. But in what appears to be a cooling of relations between the BWIA board of directors and the Manning administration, the private sector-controlled board is insisting that Government must put its demands in writing. Government sources, surprised at this latest development, however, told the Sunday Express that the BWIA board were twice briefed on the State's bail-out deliberations by a troika of government ministers--Junior Finance Minister Ken Valley, Public Administration Minister Dr Lenny Saith and Transportation Minister Franklyn Khan. Industry observers found "curious" the board's counter demand for written instructions from Cabinet at a time when the clock is fast ticking down on BWIA. On Friday, the BWIA board appeared to be in no apparent rush to meet the State's requirement for funding, opting to await written instructions from Cabinet. And while the Aleong management appears publicly confident that the Government will not allow BWIA to go under, insiders report that Government is looking at several scenarios, among them: ? a package of legislation to take to Parliament to provide for a Chapter 11 landing, which will place everything, including all labour contracts, on the table up for re-negotiation; and ? liquidation of the partly privatised BWIA and start-up of a new flag carrier, minus the excess baggage of onerous union contracts and expensive cost structure. Much will depend, however, on the next move of the Duprey-led board of directors and the Government demand for a management review of Aleong and his team of top airline executives. From all accounts, Aleong continues to have trouble convincing Government of his turnaround plan despite his high standing with the BWIA board as a "tough, shrewd strategist". But observers claim Aleong spent too much, too soon. Troubling questions remain about his executive supply contract and its bonus-link to profits, the sale and refinancing of aircraft and other investments; the expensive start-up and sudden demise of BWIA's regional commuter service late last year--Bee Wee Express which left BWIA with two idle Dash8-300s and the virtual giveaway of revenue streams in catering and the airbridge service to private investors. Aleong denies the charges and insists he is doing all he can to turn the airline around. But as reported in this series, a review of the accounts shows that a significant chunk of the Aleong-declared profits originated from extra-ordinary, non-operating items involving the sale of assets. The Aleong management also benefited from a US$5 million Government credit placed in the 2001 accounts, an expense that was tacked on to the 1995 accounts and year one of the Ed Acker privatisation. The Acker group recorded a US$5.2 million loss in 1995 but industry analysts question whether BWIA actually made a loss, if that amount was properly applied in the 1995 accounts. Page 47 of the 2001 accounts (item 22) points to a US$9.9 million credit from Government, relating in part, to "settlement of the 1995 investment agreement and related issues." Insiders report that expenses were overstated in the 1995 accounts as a direct result of pre-privatisation bills owed to suppliers being placed in the 1995 accounts. Tough for the long gone Acker, but a lucky reconciliation of accounts for Aleong, who said he was on his way to reporting a projected US$9.2 million profit in 2001 when 9/11 hit BWIA's bottom line. He still boasted of a modest loss of US$694,000, however. In another transaction that would raise old suspicions about the Tobago Express venture, BWIA in December last year subleased one of its three Dash8-300 airplanes, 9Y-WIP, to Tobago Express for the exact amount owed on the monthly lease paybacks, US$105,612.76. BWIA would wetlease the plane back from Tobago Express within days of the sublease agreement for practically the same sum of money or, according to the agreement signed by Aleong: "The Block Hour Rate shall be equal to the higher of (i) US$105,612.76 or (ii) the cost to Tobago Express of operating the aircraft during the preceding month (which cost shall not exceed the standard industry norms)." Simply put, extra money for both BWIA and Tobago Express. The two lease transactions, in effect, has allowed BWIA to continue its intra-regional flight operations with lower paid Tobago Express pilots and cabin crew. The deal also effectively gives Tobago Express a free plane. And while no public financial information is available on Tobago Express, insiders report that the low-cost carrier which got its financial start-up from BWIA, recorded first year revenues of over $32 million. The airbridge shuttle, according to sources, operated just under 6,000 flights with a seat capacity of 295,300. The actual number of passengers ferried on the airbridge has been put at 217,591. *************************************************** 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.pscutt.com TnT Webdirectory: http://search.co.tt *********************************************************