Guyana Airways not in crisis - Persaud - says nearly 60% of NY, Toronto market captured Stabroek News January 13, 2000 Guyana Airways (GA) 2000 top brass yesterday declared the airline was not in a crisis and by the end of last year it had done exceptionally well by capturing close to 60% of the market on two lucrative North American routes. At an editors briefing summoned by GA in the wake of a news item in yesterday's Guyana Chronicle saying that the airline was "reportedly facing serious problems," GA Chairman Yesu Persaud denied that it was in a crisis and said it was "here to stay". He further rejected a claim in the report that the airline had made a $800 million loss last year, explaining it was not "even 5 per cent of that". He did not provide a figure but said "yes we will make a loss (on last year) but not a horrendous one". The GA chairman, however, told media editors at the briefing at his High Street, Kingston office, that with the onset of the low season the airline would need an injection of cash which would come from institutional sources. He did not say how much it would need. Passengers could also expect higher fares in the low season as Chief Executive Officer, Anthony Mekdeci told the briefing that the prices during the last peak season were unlikely to come down. It was also disclosed that direct flights inaugurated last year to Miami would be halted because of low demand. Persaud revealed that the government has given the green light for a public offering of shares in the company here and abroad including its 49 per cent stake and this could see the expansion of the company's shareholding. Persaud said that this was one of the matters discussed with President Bharrat Jagdeo when he was briefed recently on the operational issues affecting the airlines. Persaud also commented on the reported resignations of the airline's Chief Executive Officer, Anthony Mekdeci and its Operations Director, Larry Singh, both of whom were at the briefing. Others present were GA Vice-Chairman, Vic Oditt and directors Winston Brassington and Hilbert Shields. Persaud explained that both Mekdeci and Singh had indicated their intention to leave the airline after a certain period when they took up their appointments. Mekdeci had indicated December 31, 1999, but Persaud said he had been prevailed upon to remain until the end of the month; Singh intended to leave during November and he too was prevailed upon to remain. Persaud said that Mekdeci, for whom a replacement had not yet been identified, would be retained as a consultant; Singh, who has extensive business interests in the US, would not be relinquishing his relationship with the company entirely. Commenting on reports about difficulties with its US-based caterer, Mekdeci confirmed that it served snacks on its flight from New York on Sunday but blamed it on an administrative glitch and not because of non-payment as alleged in the Chronicle report. He explained that the caterer had been paid to provide services but that a failure of communication between its New York, Miami and Chicago offices had resulted in no food being provided on the Sunday flight. Mekdeci said that the caterer had on Monday apologised for not providing a service on Sunday. Commenting on the talks GA 2000 has been having with BWIA, one of its competitors on the North American route, Persaud stressed that they had nothing do with any financial difficulties facing GA 2000. He explained that the talks on Monday were a continuation of the discussions GA 2000 officials had had with BWIA chairman, Conrad Aleong, during a visit he made here late last year. The discussions, he said, were related to the areas in which they could collaborate to cut expenses such as code sharing, bulk acquisition of supplies and ground handling services. Persaud stressed that all airlines forge linkages including BWIA which has a number with other airlines. He added that BWIA was having discussions about establishing linkages with Air Caribbean, LIAT and would soon start speaking with Air Jamaica. Mekdeci explained too that GA 2000 already had a code sharing arrangement with Suriname Airways because of that airline's inability to meet the requirements for flying into New York. Commenting on GA 2000's performance since its start-up in July last year, Persaud said that it had captured close to 60 percent of the market to the United States and Canada. The number of passengers to New York rose from 2,013 in mid-July to 6,259 (55% of the market) at the end of December; and to Toronto from 901 to 2,446 (57.8% of the market) during the same period. BWIA's passenger load from Georgetown over the same period to both destinations dropped from 5,546 to 3,070 and 2,065 to 1,784 to both destinations respectively over the same period last year, according to the GA figures. No data was available on GA's average passenger load per flight. Persaud explained that GA 2000 had to compete against a background of falling fare prices, as low as they were 20 years ago, and energy costs had more than doubled during the period. He pointed out that GA 2000 when it started up in mid-July, had to match the reduced fares which its competitors had introduced in an effort to retain the passengers they had captured from Guyana Airways Corporation (GAC) when the latter went out of business. He explained that if the fares to New York and Toronto had remained at the US$700 and US$750-800 level, instead of being around US$549 and the $569-599 level to these destinations, the extra revenue would have made a significant difference to the airline's financial performance. Persaud explained too that the airline would soon be discontinuing its direct flights to Miami, because "the traffic is just not there for a non-stop flight". The absence of traffic is also the reason why the airline had not yet introduced a second aircraft as it had planned to do. Commenting on the airline's performance, Mekdeci said that its on time performance was good, adding that it has not had to leave any passengers or luggage behind. Persaud explained too that one of the marketing problems which the airline had to overcome was the negative image associated with the defunct GAC which had acquired a reputation for being unreliable. Another problem he said too was that the airline had not yet had the cushion of having credit extended to it and thus had to operate on its cash flow. A briefing paper circulated on GA said that while the airline is surpassing GAC's best passenger loads, its average load capacity remains low "because of the much larger passenger carrying capacity of the A300 Airbus". It added that as a start up airline with limited capital investment, GA 2000 is bound to experience losses in its first two or three years even with the most prudent management. It pointed out that BWIA turned a profit after nearly 58 years and Air Jamaica has continued to suffer severe cash flow problems and losses - even after privatization - on government lending and guarantees. The briefing paper contended that BWIA had also been provided with a US$210M government guarantee which has enabled the Trinidad-based airline to expand its fleet and "indulge in a price cutting war against GA 2000". GA 2000 was privatised by the government last year when it sold a 51 per cent stake to Aviation Investments, a consortium led by the Aircraft Owners Association of Guyana. The businessmen invested US$1.8M in the operation while the government's 49 per cent stake was underpinned by US$1.7M of GAC's assets. The new operation also assumed US$2.2M of US$9M of GAC's liabilities. The privatisation was a consequence of the then state-owned GAC being forced to cease operations in February last year after racking up debts totalling almost US$10 million, of which US$6 million stemmed from problems with the Boeing 757 it had leased. A © page from: Guyana: Land of Six Peoples