Kevin O'Toole/LONDON
IF EVER AN AIRLINE were in need of some clear, decisive, management, then it is BWIA International Airways. After experiencing privatisation, a major management-upheaval and gearing up for an ambitious expansion plan, the carrier still seems no nearer to showing a clear sense of direction or a profit.
The man now charged with turning that around is Gilles Filiatreault, a Canadian airline veteran, who arrived as the carrier's new chief executive on 1 August.
His appointment follows a torrid couple of years at the Trinidad-based airline. After some false starts, the Trinidad Government - with some reluctance - finally privatised its flag carrier early in 1995, selling a 51% share to an investment consortium.
Entrepreneurs Ed Acker, the ex-TWA boss, and Ed Wegel, who led the consortium, came in as chairman and chief executive, laying out an ambitious expansion for the carrier, including plans for new routes into South America and the USA.
That was backed up by talk of new-aircraft acquisitions to bolster the ageing long-haul fleet. The numbers and types have varied widely and, while Boeing was initially in the frame, BWIA eventually settled for a mix of Airbus A321s and A340s. There was also an "agreement" to take ten Embraer EMB-145 regional jets for a new short-haul network.
All of these plans were laid out on the promise of a return to profit by the end of 1995, but, instead, the airline continued to lose money, albeit at a reduced rate. Acker resigned and Wegel followed, almost exactly a year after starting out on the adventure.
It was little surprise that BWIA then turned to Filiatreault, whose pragmatic and forthright management had been largely responsible for transforming the fortunes of Caribbean regional carrier LIAT.
Filiatreault's career actually started a lot further north, with a long spell at Air Canada and the Canadian regional-airline business, before he came down to Antigua in 1994 to take charge at LIAT.
Like its larger Trinidadian partner, LIAT was a loss-making state-owned airline in the throes of a privatisation. Filiatreault saw that through in November 1995, with BWIA taking a 29% stake. Unlike BWIA, the regional carrier is now back in profit.
Filiatreault has wasted no time in getting started at BWIA. Within two weeks he had presented the shareholders with a report on the carrier's state of health and, within the month, had formulated proposals for putting it right.
He admits that, on the surface, BWIA's operating figures look good. Passenger traffic is steady and its aircraft are full, with load factors running at a highly respectable 68%. The problem lies with the fares, which BWIA can command on its core business, which is essentially bringing tourists from Europe into the Caribbean. Filiatreault says that discounts are running at perhaps 50% across the business and, at worst, are more than 70%. In short, BWIA has charter-airline traffic, but the cost base of a scheduled flag carrier.
One task has been to tackle costs. Filiatreault has begun to ask departments to forget what they have historically been allocated and, instead, to assess what they really need.
He points out that many of the practices in BWIA have been driven along by inertia over the years, rather than by sound planning. He adds that the airline is not alone in having promoted people with excellent technical backgrounds without first having taught them about being business managers.
Filiatreault is also casting a fresh eye over the fleet and operations. He has earmarked the closure of the weekly Zurich service, which, he argues, was competing with the airline's other mainland European service from Frankfurt. Instead, man- agers have been asked to investigate other possible destinations, such as Copenhagen, to serve the strong Scandinavian tourist market.
He has doubts about setting out into fresh markets, such as South America, except possibly in cargo. "We don't know the market and it represents a significant risk," he says, instead outlining plans to begin testing the water in 1997 in extra US cities, such as Atlanta, which have no direct links to the Caribbean islands. That would be done with leased aircraft, such as BWIA's remaining four McDonnell Douglas MD-83s.
Although the carrier will lease a second A321 from International Lease Finance in October, and could add a third early in 1997, the purchase of two new A340s is no longer in the frame, although officially the order stands. Filiatreault proposes a more modest investment in refurbishing BWIA's three Lockheed TriStar 500s, at a cost of around $2.5 million per aircraft.
He is equally pragmatic about alliances, suggesting that BWIA should look to tie up with a major airline grouping which covers its main markets in North America and Europe (especially the UK).
That appears to fit uneasily with the talks going on with Virgin Atlantic, which has offered to buy a 27% share for $10 million. Filiatreault says that the issue is one for BWIA's shareholders, but adds that he believes that the price is too low.
Filiatreault admits that BWIA is set to lose at least another $7 million this year, but says that the first rough estimate for 1997 is positive. Whether BWIA makes its first annual profit in nearly 60 years may depend on whether the pragmatic Canadian is given a free hand.
Source: Flight International
