Collapse of BWIA's deal with Canada

PART VIII

IN May, 1967 there was very little solid ground on which to repose the hope that within a reasonable time, or at all, the vital consideration deemed by Canada to be essential to its cooperation with BWIA would be attained.

Nevertheless, the Trinidad and Tobago government chose the path of optimism and continued to cherish the hope that where it had failed Canada might succeed; that the long and cordial association and the fund of goodwill built up between the Canadian government and the governments of the Commonwealth Caribbean might prevail against their reluctance to join TT in having BWIA as the regional air carrier.

Eventually, by late August, the TT government and BWIA became resigned to the sad conclusion that not even the attraction of an association with Canada could overcome the unwillingness of some Caribbean governments to participate in BWIA.

It therefore became necessary for TT to communicate with the Canadian government its sincere disappointment that a basic requisite of Canada’s proposals continue to remain unachieved. If there had existed the slightest hope of overcoming the difficulty posed by that basic requisite, no discussions with anyone else would have been initiated or pursued.

In the course of several letters exchanged between the prime ministers of TT and Canada, the difficulty was referred to with consummate diplomatic tact by the Canadian PM: "In a matter as complex as this (contingent upon the reactions of several governments) it is, I think, understandable that these reactions have not been forthcoming quickly, or in a clear-cut fashion. What information we have received has not in fact been uniformly encouraging. Under the circumstances it is difficult for us to go any further with respect to immediate financial commitments."

Before the collapse of the Canadian proposal, as a result of the unwillingness of other governments to participate in BWIA, a joint approach was made to BWIA and to the TT government by R W Pressprich & Co International Ltd – a New York investment banking company – and Trans World Airlines (TWA) – one of the world's major airlines – by letters dated July 20, 1967.

The gist of their proposals for the expansion, re-organisation, and re-financing of BWIA was that a multi-national Caribbean air carrier jointly owned by the governments of TT, Barbados, Guyana, and Jamaica and by an investor group can be provided by TWA with the necessary technical expertise and managerial skills.

The investor group would have voting rights of 40 per cent, with those governments having 60 per cent of the voting rights, but the investor group's participation in the profit should be 60 per cent while that of the governments should be 40 per cent.

Pressprich and TWA representatives were informed that a proposal from the government of Canada and Air Canada was being considered and that, in any event, the basic objectives of an airline jointly owned by a consortium of the governments of TT, Barbados, Guyana, and Jamaica, and by an investor group might well prove to be an insurmountable obstacle to further discussions, having regard to the reluctance of some governments to participate in any such consortium.

It did not take these representatives a great deal of time to recognise the accuracy of what must have seemed to them originally to be the gloomy forebodings of the TT government and BWIA. The result was that a little more than a month later, an August 29 letter was received from R W Pressprich amending their previous proposal and enabling negotiations to advance.

The key to further progress was the willingness of Pressprich "to make the proposed investment in BWIA as currently existing, prior to receiving definitive commitments from other Caribbean nations which might eventually join such consortium."

The attraction of the proposal to the TT government was the assertion that it "would not be expected to contribute further capital, although it would be expected to continue its guarantees on existing debt and providing appropriate economic incentives, whilst receiving an agreeable percentage of the shares of the new company in return for its current ownership of BWIA."

Also of special interest the government was the proposal for the erection of a Hilton hotel at Rocky Point, Tobago. The inextricable association between airline seats and hotel beds was fully recognised, and the prospects for hotel development with the TWA connection and a Hilton hotel for Tobago were undeniably attractive.

During September and October negotiations with Pressprich continued and a memorandum of points, dated October 24, 1967, relating to the re-organisation of BWIA was submitted by Pressprich. After protracted discussions a modified memorandum was accepted by the government by letter of December 5, 1967, as a basis of discussions intended to lead to a heads of agreement and ultimately to a definitive agreement.

R W Pressprich & Co International Ltd formed Caribbean International Ltd as the vehicle by which it would implement it undertakings to the government and BWIA. It has always been recognised that Pressprich would not necessarily be the private investor participating in BWIA, and that its obligations would be fully discharged if it produced a consortium of private capital in the form of a separate independent company.

In a September 15, 1967 letter to the chairman of BWIA, TWA set out the role it contemplated to play in BWIA. TWA proposed to conduct a study on all of BWIA’s operations under the general direction of R J Fordham, senior director, Associated Airlines, and under the specific full-time leadership of J I Greenwald, director, project development, Associated Airlines.

TWA further stated that the assessment of its possible future role whether in the areas of assistance or investment will be dependent upon both the results of the study and the other actions undertaken by BWIA to ensure its future economic viability.

After agreement by the government and BWIA, TWA commenced the study.

The heads of agreement based on the memorandum of points accepted by government on December 9, 1967, was signed in early 1968, and copies were immediately made available to other West Indian governments. Eventually, after considerable further bargaining and negotiations, agreements, to which the TT government, BWIA, and Caribbean International Ltd were parties, were signed on May 24,1968.