Gonsalves said that the forecast for the airline industry worldwide this year is for a loss of US$5.6 billion, the regional airline business “is really a messy one”.

KINGSTOWN, St Vincent, CMC – Prime Minister Dr. Ralph Gonsalves has described 2009 as very challenging for the  regional airline, LIAT,  but is hoping that it “breaks even” this year.

St. Vincent and the Grenadines is one of three main shareholders governments of the airline with the other two being Barbados and Antigua and Barbuda.

Gonsalves, who attended a shareholder’s meeting in Barbados last week, told Parliament that last year, while the airline had performed reasonably well from a financial standpoint, regional passenger traffic was down by 10 per cent.

But he said lower fuel prices had helped the finances of the airline.

According to Gonsalves, LIAT recorded a net profit of EC$7.4 million (US$1.7 million) last year, as compared to a loss of EC$2.8 million (US$1.03 million) the previous year, despite an operating gain of EC$11.1 million (US$4.1 million) in 2008.

Gonsalves said that the forecast for the airline industry worldwide this year is for a loss of US$5.6 billion, the regional airline business “is really a messy one”.

He said that that of the four other major airlines owned by regional governments, only the Trinidad and Tobago based Caribbean Airlines (CAL) is profitable because of its financial assistance from the government.

“Air Jamaica, Bahamas Air and Cayman Airways are in financial trouble,” Gonsalves said, noting that LIAT is now looking at closer cooperation with Caribbean Airlines.

But he noted that “before we get to the question of one airline there are lots of areas for functional cooperation between LIAT and CAL that we are pursuing”.

Gonsalves also said the airline is preparing itself for increases in oil prices this year.

“At the moment, it is US$86 a barrel but we are budgeting more conservatively for US$92 a barrel for this year,” he said, while acknowledging that the budget forecast does not include increases in wages or salaries.

He said while that LIAT’s negotiations with the pilots union is before arbitration, the company was looking to employ more engineering staff.

He also indicated that LIAT is following an international trend to reduce travel agency commission rates and will have a phased closure of ticket offices throughout the LIAT countries, which would save the airline in the vicinity of three million EC dollars (US$1.1 million).

Gonsalves said that LIAT would also have to seriously deal credit card fraud and would look to implement a new system for payment.

“I know there are complaints and enormous challenges. In 2008 into 2009, we were fortunate about the fuel cost coming down and in so far as the strategic partnership is concerned, one can understand naturally, I’m most interested in this to see if we can secure this ahead of the completion of our international airport at Argyle by June 2012.”