BWIA takes flight

PART THREE

The formal privatisation of BWIA kicked off with a lavish dinner function at the Trinidad Hilton ballroom in February 1998.

In attendance were representatives of the investors, the government, the four trade unions representing the BWIA employees and other stakeholders.

At the dinner, it was announced that Acker was selected as the chairman, president and CEO of the new BWIA.

It was also announced that Edward Wegel will be BWIA’s chief operations officer.

Conrad Aleong, the former CEO and a veteran airline executive who had expressed doubts about elements of the restructuring and business plan developed for the new BWIA, in particular, as it related to the proposed route structure and aircraft re-fleeting, was not named for a position.

The business plan incorporated a new schedule creating hubs in Port of Spain, Antigua, Barbados and London with distinct banks of flights allowing for on-line connections as well as connections to LIAT and other carriers. Unprofitable routes such as Frankfurt and Zurich would be dropped.

The plan also proposed to replace the Lockheed L1011-500 and the McDonald Douglas MD83 fleets with Boeing 757-200 and Boeing 767-300ER aircraft.

By the year 1999, the new fleet would have comprised of two Boeing 767-300ER, seven to nine Boeing 757-200 and two MD83 aircraft, primarily to serve smaller markets and/or develop new markets.

The new BWIA business plan projected a net income of approximately US$10.5 million and operating cash flows of US$21.0 million for 1995.

On September 30, 1994, an update to the business plan was issued. According to the update, discussions commenced for Boeing 767 and 757 airframe and engine orders. Further, a proposal was made to create a special purpose company (SPC), the shareholders of which will be Boeing, Pratt and Whitney and new BWIA to own two Boeing 757 and two Boeing 767 aircraft which will utilise manufacturer and the US Eximbank financing to lower BWIA cost of ownership.

Negotiations also commenced with ILFC and GECAS for leasing the additional Boeing 757 needed by the new BWIA.

The update stated that to ensure that all options were explored, a proposal was requested from Airbus for the procurement of a fleet of Airbus A320/A340 aircraft. This proposal was expected to be received in quick time in New York.

While the official head office was in Port of Spain per the privatisation agreement, a quasi-head office operated in New York.

Ex-Pan Am employees were hired including a manager, aircraft sales and acquisition. He brokered the sale of the BWIA-owned MD83 aircraft for US$16 million.

During the new BWIA’s first year of operation, several decisions were made that had a negative impact on its financial performance.

The first was a decision to acquire a used Boeing 727 passenger aircraft and convert it to a cargo freighter.

While the aircraft was undergoing conversion to a freighter at an aircraft modifications centre in Miami, the local BWIA Boeing 727 chief pilot did some route analysis studies.

These studies revealed the aircraft performance characteristics significantly limited the payload for a non-stop operation from Port of Spain to Miami.

For example, with adverse winds, the aircraft was limited to just over 1,400 kgs of freight.

After spending large sums of money on this project, the Boeing 727 freighter programme was scuttled.

Another misstep was a short-lived South American operation with flights from Port of Spain to Sao Paulo using the MD83 aircraft.

Due to its unprofitability, the route was abandoned.

New BWIA entered into an arrangement to lease a Boeing 767-300ER from GECAS.

A husband and wife team called Georges and Georges were hired to design the external and internal livery for the Boeing 767.

The Georges had very limited knowledge of aircraft interior regulatory requirements and had to seek intense guidance from the BWIA in-house experts in Trinidad.

At one point, Boeing called the BWIA engineering offices in Trinidad requesting an urgent meeting with BWIA, Boeing and the Georges who wanted the aircraft radome to be painted in silver. The aircraft radome houses the weather radar and must be in non-reflective black for receiving the return radar signals.

The day before a BWIA technical team was scheduled to travel to Boeing’s facilities in Seattle to commence delivery activities, Acker advised that the Boeing 767-300ER deal was off and BWIA would be going with an Airbus fleet starting with two Airbus A321-131 aircraft to be leased from ILFC.

Another sore point, particularly among BWIA employees, was the lease of a property on Lady Chancellor Road as the private residence for Acker for a period of five years. The Georges were hired to re-design the house. The house was literally demolished and rebuilt. Successor CEOs refused to live in the remodelled house.

BWIA attempted to terminate the five-year lease by negotiations. The owner of the property firmly stated that to terminate the lease agreement before the expiration of five years, the house would have to be completely restored to its original condition. The house remained unoccupied for the five-year lease period.

At the end of the new BWIA's first year of operation, the airline had lost approximately US$23 million.

At its meeting to discuss the first year’s financial results, the board relieved Acker of his position as chairman, president and CEO of the airline.

By that time, the government had changed and Brian Kuei Tung was the new Minister of Finance in the Panday administration.

Wegel soon departed BWIA and Ken Gordon was appointed as the new chairman.

Gordon’s tenure was also short-lived as he resigned over a defamation matter involving Panday.

Lawrence Duprey was appointed as the new chairman.

In August 1996, the board recruited French Canadian Gilles Filiatreault as the new CEO.

Filiatreault felt that the A321s were not suited for BWIA. Through an Irish broker, the two A321s were subleased to Air Alfa, a Turkish charter airline based in Istanbul.

In 1997, BWIA lost US$18.2 million.

In February 1998, Filiatreault reigned as the CEO. Panday at that time began to express his government’s frustration at BWIA’s continued losses and indicated that his government may reconsider cash bailouts to BWIA.