Caribbean Star President Skip Barnett reported that despite the challenges of working with three different governments – Barbados, Antigua and St. Vincent – his airline and LIAT are poised to complete the integration of their networks and become LIAT, Star of the Caribbean.
He said there will be meeting on Tuesday in Barbados to conclude the agreement with a goal of completing the integration by June 15. The two began operating as a single entity on February. Related Story “We are already seeing the benefit because neither airline is bleeding cash any more.”
He described the consolidation as a win-win situation for both airlines since it combined Caribbean Star’s strength as an interline carrier with LIAT’s strong local loyalty. Barnett said had they remained separate they were on the “path to destruction.” LIAT’s reservations system did not allow interline connectivity but it has upgraded its systems to be able to handle it. Caribbean Star, on the other hand, was developed on the interline model to serve U.S. carriers. Consequently, interlining will be extended beyond the current U.S. market to the important European market. The two primary connecting markets are Barbados and Antigua.
The alternative was to shut down both operations but that would have been costly since they would lose their operating authorities and would have to reapply for routes and terminate employees. Instead the two entered into an asset purchase agreement with LIAT purchasing the assets of Caribbean Star.
The key for the two carriers is to emerge from the process debt free. The governments have forgiven debt as has Sir Alan Stanford, who owns Caribbean Star and its sister airline Caribbean Sun, which recently ceased operations. Related Story In return for debt forgiveness, Stanford retains a 35 percent stake in the combined carriers with Barnett representing him on the LIAT board. LIAT’s Mark Darby will manage the new entity.
Barnett also reported on the progress for Caribbean Sun saying he should be able to announce its future in the coming weeks. The original plans called for Caribbean Star and Caribbean Sun to be consolidated but after trying to do so, he realized that was not going to work. The company pulled those plans, ultimately shutting Caribbean Sun down in favor of certificate maintenance mode flying a single route per month from Fort Lauderdale to Key West. “121 certificates are very valuable, particularly if there are have foreign flag status,” he said, adding, “we hope to announce in the coming weeks a deal for the Sun certificate that will bring in a new investor and take it on to a new life incorporating larger jet aircraft. We expect the both deals to cross the finish line about the same time.