BWIA takes flight

PART FOUR

The privatisation of BWIA in 1995 had failed and investors lost millions of dollars.

Conrad Aleong, a veteran airline executive who had previously warned about the privatisation pitfalls, was brought back by the Duprey board to conduct an assessment of the failed airline and make recommendations for its recovery.

After the board considered Aleong’s report, he was hired in February 1998 as the president and CEO with a clear mandate to turnaround the airline.

Aleong put together a team and under his guidance, a turnaround plan was developed.

BWIA image was rebranded with new internal and external livery, a 3D pan logo and new staff uniforms.

Aleong achieved BWIA’s first profit ever of US$9 million in 1998, US$3.6 million in 1999 and US$1.1 million in 2000.

BWIA required money to recapitalise the airline with an emphasis on re-fleeting. Without financial assistance from the government, BWIA applied in November 2000 to the Securities and Exchange Commission for approval of a prospectus covering the issue of 12 million BWIA shares at a price of $7.85 or US$1.25 in an Initial Public Offering (IPO).

By letter dated November 27, 2000, the commission issued its receipt to BWIA for the prospectus.

The Stock Exchange represented that an application was made to it later that year for the listing of BWIA’s ordinary shares on the official list of the Stock Exchange upon completion of the IPO.

The issue of 12 million shares to the public commenced on December 4, 2000, and remained open in other Caribbean jurisdictions until January 19, 2001.

BWIA’s issued share capital at the date of listing was 46,824,656 shares, of which 15.5 per cent (representing 7,279,906 shares) was taken up by the public in the IPO.

BWIA was listed on the Stock Exchange’s official list on February 6, 2001, at the issue price of $7.85.

By August 2001, BWIA had already realised a US$9 million profit and was heading for its fourth consecutive year of profit when the events of September 11, 2001 (9/11) grounded all flights in the US.

It took some time for foreign airlines to be allowed to fly into the US.

BWIA at that time operated high-yield flights to Miami, New York and Washington DC. With the resumption of flights, load factors had fallen by approximately 60 per cent.

BWIA's financial woes were compounded by the Iraq war and SARS which came soon after 9/11 and significantly affected the revenues of the airline. It continued to keep all employees on the payroll with full salaries and benefits.

Aleong’s management team had renewed the fleet replacing the aging L1011 and MD83 with seven new Boeing B737-800NG, two seven-year-old A340s and three Dash 8 300Qs.

It was a tremendous achievement as for the first time in BWIA’s history, it funded all the new aircraft acquisitions with its own business plan, hard work, hard-fought profits and rigorous negotiations.

The BWIA employees were represented by four recognised unions, one of which was the Aviation Communication and Allied Workers Union (ACAWU) which represented the general staff including mechanics, technicians, clerical and other support staff.

ACAWU employed an OWTU union officer as its labour relations officer. He orchestrated a takeover of ACAWU and became the president of the union.

The ACAWU members, particularly the technicians and mechanics were radicalised.

Employees began to engage in "latent" industrial action. The elapsed ground time for Boeing 737-800 maintenance "C" checks that would normally take about two weeks began to drag on, taking between approximately six to eight weeks. This caused significant aircraft scheduling problems and loss of revenue.

In early 2003, BWIA took decisive remedial action by outsourcing the Boeing 737-800NG "C" checks to Delta Airlines in Atlanta where the checks were done within a week.

On January 28 2003, several hundred maintenance employees were retrenched.

In May 2003, Aleong left BWIA and Nelson Tom Yew was appointed to act as the CEO.

Duprey was soon replaced by Anthony Jacelon as chairman.

BWIA continued to face challenges and in December 2004, the board was mandated by then prime minister Patrick Manning to develop a long-term plan for the airline’s viability.

The government appointed business magnate Arthur Lok Jack to head a special task force to develop the commercial options that would transform BWIA into a viable entity.

Trade and Industry Minister Ken Valley received a draft of the Lok Jack task force’s plan on January 11, 2005, and the final plan one month later.

Cabinet pondered over the plan until September 28, 2005, when Manning announced that BWIA would be restructured into a regional air carrier that would in due course be open to participation from regional governments and the private sector.

A new BWIA board of directors was appointed with Lok Jack as chairman with a clear mandate by the government to ensure the airline was transformed into an entity that is "efficient, safe, reliable and customer-oriented."

However, uncertainty about the plans for BWIA’s transformation led BWIA by letter dated November 15, 2005, to suspend trading in its shares for a period of three months, in order to halt any speculative trading pending the restructuring of the company. It indicated that it also wanted the option to request the continuation of the suspension if circumstances warranted this.

By letter dated November 16, 2005, the Stock Exchange advised the commission that trading in BWIA’s shares had been suspended with immediate effect for a period of three months at the request of the company.

By letter dated February 9, 2006, BWIA requested an extension of the suspension of trading in its shares for a further period of three months.

It indicated the board of directors had undertaken an in-depth analysis of the company to inform the restructuring process and that the company was in the process of preparing a business plan.

It was unable to indicate a definitive time-frame for the completion of this exercise.

It further indicated it had also requested an extension of the suspension of trading on the Barbados Stock Exchange.

By letter dated February 14, 2006, the Stock Exchange granted the extension of the suspension for a further three months.

In March 2006, Peter Davies, formerly of SN Brussels Airlines in Belgium was recruited by the Lok Jack board as BWIA’s new CEO.

To be continued in Part Five.