In recent articles both in this publication as well as the SUNDAY SUN I have noted how weak shareholders really are, as a practical matter, in shaping the destinies of their companies.
At least in Barbados.
Oh sure, there’s plenty of lip service about how important they are, but that’s usually mainly to get you to pony up the dough to buy some shares.
When you do, you more often than not become just another statistic to be manipulated by clever boards of directors, and in reality the majority shareholder, usually a large corporation, makes the decisions for the company with help from a few smaller ones which have their own good corporate reasons for doing whatever they have decided to do.
But we have now come across a case where the majority shareholder himself apparently is as powerless to shape the direction of the company as the smallest, and is letting his frustration be known to all the world by publicly supporting a start-up competitor.
Can you imagine the owners of a large corporation which has a sizeable, if not majority, market share telling the public they are supporting some upstart competitor to their own company on the grounds that their own company needs such competition?
Now imagine them doing so after taking up money and increasing their stake in the company by buying out a previous competitor, only to now bemoan the fact that competition had been just what their company needed then and needs now.
Ladies and gentlemen, I give you the majority shareholder of LIAT (1974) Ltd, the Government of Barbados.
Richard Sealy, our Minister of Tourism, said in Parliament last week that “there is no reason why LIAT needs to be scared of competition. I think that we really are doing ourselves a disservice when we try to protect LIAT from REDjet”.
He said LIAT had competed with BWIA for a long time. He forgot to mention Caribbean Star.
Not to be outdone on the patriotic front, George Hutson, our Minister of International Transport, said REDjet would improve tech skills as well as hangar facilities in Barbados. “A whole new industry can be developed if we do what is necessary to support the development of the airline,” he added.
So after decades of LIAT, it is apparently newcomer REDjet on which Government is pinning its hopes of developing a “whole new” aviation industry.
The welcome fest continued. Opposition spokesman on civil aviation, Ronald Toppin, who I believe was responsible for that area of Government at one time in the last administration, chided Government for being silent on REDjet for so long as he welcomed the airline, and Member of Parliament Gline Clarke said it should make LIAT more competitive and efficient.
But what are the shareholders, of which our Government is the largest, doing about this airline they own that needs competition so badly? Nothing, apparently.
LIAT continues day-to-day arguing and fighting with its unions in an effort to reduce costs despite its merger with Caribbean Star.
It continues to charge its passengers to the point where they scream for mercy and therefore put pressure on their politicians, whether in Trinidad or Barbados, for help.
The Barbados political response has been to act as if LIAT is some strange interloper corporation which has achieved unhealthy dominance over our airspace and is sorely in need of competition, which both sides of the political divide are happy to foster through REDjet.
Which country has done more than all the rest combined to put LIAT into the monopoly position it now has? Barbados. And what are its shareholders doing about that? Supporting REDjet.
Earlier this year, Caribbean Airlines Ltd (CAL, formerly BWIA), which itself acquired Air Jamaica routes and some of its planes in return for giving the Jamaican government a 16 per cent equity stake, announced it was going to compete with LIAT by putting several Dash-8s into the region’s skies. – January 12 MIDWEEK NATION.
Mind you, LIAT does not appear to be enjoying any sweets from its near-monopoly position: it had an operating loss around $11 million last year after earning a $9 million operating profit the year before.
Notice you never hear about net profit or loss, just operating, because when you add in debt service and repayment there would probably not be anything left to pay those shareholders in terms of net profit.
Yet what do we as a country do about LIAT?
We let it fly and we hustle about looking for airlines to compete with it.
If we are determined to ensure LIAT fails, then why don’t we just put it out of its misery once and for all?
Until the politicians on both sides can tell me why they have washed their shareholders’ hands of LIAT, leaving the country owning most of the shares and therefore the largest portion of the airline’s debts, obligations and responsibilities, I will consider them hyprocritical in their welcoming REDjet.
They are just pandering to the electorate while sidestepping their own responsibility to deal with LIAT.
