LIAT’s sale, lease draw varying responses

A former board member has called on the airline to make public details of the transaction, while  a former marketing manager supports the decision, describing it as a routine manoeuvre in the aviation industry.

A former member of the board, who requested anonymity, said the sale of the two aircraft goes counter to plans to increase the company’s asset base.

“Liat needs to present to the public the rationale in cost breakdown. A loan payment is much cheaper than a lease,” the individual, who requested anonymity argued.

He also charged that government must come down on the current board for making such as decision, as cutting assets is the worst decision the company could have ever made.

“The lease cost more expensive than the loan cost,” the former board member said.

On Monday, David Evans said the sale allows LIAT “to raise some capital for the business and you still keep the aircraft.”

He also stated the airline does not intend to sell any more of the ATRs, and added that LIAT would still be responsible for maintaining those it currently leases.

The company finalised the sale of its second ATR-42 airplane after it obtained approval from the Caribbean Development Bank, which financed its re-fleeting about two years ago.

Meantime,  former marketing manager Gatesworth James said the selling of aircraft and leasing them back is a common practice.

James said this is one of the cheaper ways of obtaining cash, particularly if the airline is struggling financially.

“It’s commendable that they are thinking about a long term strategy to get the airline on its feet. My only concern here is it has to be a very strategic move, a combination of moves, but should not be the only way out,” James said.

He also stated there are certain advantages which can be derived from such transactions.

Of the nine aircraft LIAT operates, the airline leases six and the recent sale means that it owns only three of the new plane.





 

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