Grenada’s Prime Minister Dr. Keith Mitchell said his country would do its own analysis before shelling out US$487,000 to cash strapped Caribbean airline LIAT.
His announcement comes as Grenada is among eleven Caribbean shareholding countries that have until Friday March 15 to respond to the airline’s minimal revenue guarantee (MRG) proposals.
A recent meeting in St. Kitts/Nevis agreed that the four major shareholders plus Grenada would make a one-off contribution of US$5.4 million by the end of the month to prevent the collapse of the airline.
Barbados, which has the largest number of weekly LIAT departures, that being 116 is being asked to contribute US$1.614 million, while Antigua and Barbuda, with 69 weekly departures, is to contribute US$960,310.
Dominica, has 25 weekly departures and is being asked to contribute US$347,938 while St. Vincent and the Grenadines with 52 departures per week will contribute US$723,711.
Grenada, meanwhile has 35 LIAT departures per week, and is being asked to contribute US$487,113.
However, Prime Minister Mitchell says while the country has agreed to make a payment, he is not yet ready to commit to the amount that LIAT is proposing.
“While we agree to pay some cash, I cannot say at this point in time that the number they have presented this US$487,000 is what Grenada would give,” Mitchell told reporters at a media brief in St. George’s on Tuesday.
“We are doing an analysis before I could commit; it would have to be before the end of the month,” Mitchell said.
The Grenadian leader admits that if the airline folds it would be economically devastating for the country.
“With our present situation in Grenada, if LIAT goes down, and we are not able to travel, it’s going to take some time for a new airline to emerge. It will damage our economy and damage our country and create tremendous hardship for our people,” Mitchell said.
“It is not in our interest to let LIAT go down so we have agreed that we would contribute to a five million dollars overhead cash injection which is based on certain factors.”
Mitchell said the airline had a history of repeatedly asking for “one-off bail-outs but he said, this time he has taken steps to counteract that problem.
“In other words if there is a flight that LIAT has to Grenada and it is not yielding breakeven point for LIAT, or profitability for LIAT, if we want to keep the flight we’ll subsidize it and they will tell us how much we subsidize. So therefore there will be no need for additional cash upfront in the future.”
Shareholder governments held an emergency meeting in Barbados on Monday night to discuss the way forward for the ailing airline, the details of which have not yet been made public.
Speak in the Parliament of St. Vincent and the Grenadines ahead of the meeting, Prime Minister Dr. Ralph Gonsalves said there is a likelihood that under the MRG, a number of LIAT flights across the region could be cut, if governments are not prepared to fund them with a guarantee.
“In short, there are possible, reconfigured options. In this respect, the regulatory authorities are urged to address expeditiously application by other airlines — third-tier airlines — for the various routes in a reconfigured regional air transport industry,” Gonsalves said, adding that theoretically, several countries have no quarrel with the MRG.
He said amid the “evolving saga”, the management of LIAT has sent MRG letters to the 11 destinations -Antigua and Barbuda, Barbados, Dominica, Grenada, Guyana, St. Kitts/Nevis, St. Lucia, St. Martin, St. Vincent, Tortola and Trinidad and Tobago.
MRG letters have not yet been sent to Martinique, Guadeloupe and Puerto Rico.
Gonsalves said the MRG would yield an estimated US$16 million annually but will not address the company’s existing debt to the Barbados-based Caribbean Development Bank (CDB), which the shareholder governments have had to repay.