Carrier cautiously optimistic that employees will agree to concessions to save $1m a month and stave off bankruptcy
BWIA West Indies Airways president and chief executive Conrad Aleong is so confident in the long-term prospects for commercial aviation in the Caribbean that a wide-scale collapse of airlines in the region would not be enough to stamp out his enthusiasm.
As the Trinidad and Tobago flag carrier faces the biggest crisis in its recent history, with its very survival in question, Aleong says that "even if all the Caribbean carriers failed, I would invest in a new Caribbean start-up".
Aleong and BWIA chairman Lawrence Duprey revealed last month that the 62-year-old carrier is in serious financial trouble and needs to negotiate major concessions from its employees by 31 October "or the airline's fate will be in the hands of its creditors".
In an internal memorandum to BWIA employees last month, Aleong warns that the airline is "on the brink", explaining: "We must save $1 million [TT$6.2 million] in costs per month. That is an imperative. It is the only way forward."
BWIA lost $8.7 million in the first half of 2002 and its financial condition showed little sign of improvement during the usually lucrative months of July and August.
Aleong says one-third of the targeted $1 million in monthly cost savings must come from employee concessions. "When we look at productivity per employee, we are way behind other airlines," he says.
BWIA and its pilots have been entangled in a bitter dispute for more than a year as the airline has sought to negotiate a new labour deal. Many pilots were unwilling to work on their "off days" and "blank days" during the peak summer season, which had been "traditional practice" at BWIA, according to airline management. BWIA blames the pilots' actions for causing delays and cancellations that sank the carrier into an even worse financial position than it had been when entering its summer season.
Aleong claims he is "cautiously optimistic" that the airline's 2,500 employees will agree to concessions. He has launched an intensive series of face-to-face "straight talk" sessions with workers to explain the carrier's dire financial position.
"What we're really saying [to employees] is that this is serious and we have gone as far as we can with normal management decisions and normal employee efforts, so we must top this normality and go above and beyond," says Aleong.
BWIA plans to embark on a major restructuring programme that will include the likely grounding of regional Caribbean feeder BWee Express and reducing the number of aircraft types in its fleet from five to two - Airbus A340s and Boeing 737-800s. The airline's remaining Boeing MD-80s and Lockheed L-1011 TriStar 500s will be phased out, along with the three Bombardier Dash 8 Q300s flown by BWee Express.
The airline also plans to spin off its Trinidad-based maintenance operation into a separate company that will carry out third-party repair work for other carriers. Previous plans to expand its route network in 2003 have been put on hold indefinitely.
Aleong says privatised Caribbean airlines will survive, but believes that stronger government policies are needed to prevent "wild swings" and ensure financial vitality.
"I think we will always need indigenous carriers," he says. "Our people are as proud as any others in wanting to be with their own people on an aircraft and have their own people operate the carrier. But we need to not only have private enterprise, we need a national policy umbrella under which to operate. I'm not talking about regulation, but you cannot have the marketplace subject to wild swings when the market itself is thin."
He notes that Caribbean airlines are routinely hurt financially by other carriers in the region being allowed to operate cabotage routes and by international charter operators that swoop in to "cherry pick" lucrative seasonal flights.
"Just the thought of Caribbean Star being able to operate cabotage routes between Trinidad and Tobago is abhorrent," he says. "Can you imagine that being allowed in the USA?"
Partnerships among airlines in the region, rather than constant cut-throat competition, would probably improve carriers' financial outlook, but is not an imminent development, says Aleong.
BWIA, which serves 10 Caribbean destinations, seven in the USA and three in South America, as well as flying daily to London Heathrow, is involved in an alliance with Antigua-based regional Liat, in which it owns a 29% stake. Liat plans to take over most services of the soon-to-be grounded BWee Express. But while BWIA and long-time rival Air Jamaica engage in "intermittent contact", they are not close to signing any sort of cooperative agreement.
"I don't know that we both need to co-operate to survive," says Aleong. "But we would be much better off if we did. Maybe the after-effects of 9/11 will facilitate further talks. There is an interest, but when the alligators are after you, it's hard to see the big picture."
Source: Flight International
