The Government of Antigua and Barbuda has applied to the Caribbean Development Bank (CDB) for a loan to purchase two of LIAT's three owned ATR42-600s.

Prime Minister Gaston Browne told Pointe FM radio on Sunday that the request had come after Barbados and St. Vincent & the Grenadines wrote to the CDB, seeking permission to sell the three Avions de Transport Régional turboprops which are owned by LIAT’s three largest shareholders - Antigua & Barbuda, Barbados, and St. Vincent & the Grenadines.

The three aircraft were acquired as part of a USD65 million fleet modernisation loan extended by the CDB in 2013 to LIAT at an interest rate of 3.95% per annum (variable), over a 13-year period following a grace period of two years. The loan's allocation was based upon the shareholding of each of LIAT's four major shareholder governments at the time: Barbados (USD 33.2 million); Antigua & Barbuda (USD21.9 million); St. Vincent & the Grenadines (USD7.5 million); and Dominica (USD2.4 million).

According to Browne, given their willingness to exit LIAT, Barbados and St. Vincent & the Grenadines have asked the CDB for permission to sell the three ATR42s with proceeds to then be used, on a proportional basis, to meet each of their re-fleeting loan obligations.

“But Caribbean Development Bank has indicated that in order for them to do that, they will have to call the re-fleeting loan; and because there are certain cross guarantees as well, it means that the other LIAT loans as well, they will be in cross default and they would have to call those,” he said.

The PM explained that in the event the CDB calls in all of LIAT's loans, Antigua & Barbuda would have to find "about USD25 million" for immediate payment, funding it does not have available at present.

“We have since written to the Caribbean Development Bank to ask them if they could look at the possibility of extending a certain amount of money to Antigua & Barbuda so that we can payout St Vincent & the Grenadines and Barbados for the two planes that they own out of the three," he said. "So, they will get back to us. I’m not too sure if they have the appetite for that but at least we’re trying to see if we can step up with some additional borrowings and to try and resolve the issue amicably."

LIAT currently operates a fleet of five ATR42-600s (of which two are leased from Nordic Aviation Capital) and five ATR72-600s (of which two are leased from DAE Capital and three from Nordic Aviation Capital). Under the Antiguan government's proposed reorganisation plan, which must first garner court approval, LIAT will relaunch with a fleet of just five aircraft initially; the three owned ATR42-600s as well as two leased ATR72-600s.

Given the significant role the airline plays in the island state's economy, Antigua & Barbuda are eager to salvage LIAT having successfully placed the carrier under Antiguan court administration last month. According to Barbados Today newspaper, Browne said last week that with Barbados and St Vincent & the Grenadines set to exit LIAT, his government was active discussions with "other prospective shareholders". However, he conceded that given current global market conditions, finding willing investors for the aviation market, at present time, had proven more difficult than originally anticipated.

“In the case of LIAT, our projections are based on about 50% of the revenue of 2019, and even if it goes down slightly, I still think we can break even. But again, LIAT is so important to the economy of Antigua and Barbuda that we have to go the extra mile to salvage it," he added.