GAC for skies before May 22 --financial deal closed By Gitanjali Singh Stabroek News April 13, 1999 The government and local consortium, Aviation Investments, yesterday closed the financial aspect of the Guyana Airways Corporation (GAC) privatisation; final closing is set for Friday. The financial agreements, signed by Chairman of the Investor Group, Yesu Persaud, and Prime Minister, Sam Hinds, paves the way for the new airline, GAC 2000, to begin ticket sales in a week and to aim for the skies before May 22. "We will ensure that when you travel on GAC 2000, the service is second to none," Persaud assured last evening. However, Anthony Mekdeci, chief executive officer-designate noted that a lot of work has to be done to get the operation going. The new management team, now without Roraima Airways' Gerry Gouveia, expects to secure a wet-lease for an American airline in ten to 15 days, which will hit the runways of New York and Guyana before the start of the summer season (June 1 - September 15). Negotiations commenced some time ago. The wet-lease arrangement will not be devoid of Guyanese hospitality as Mekdeci indicated that Guyanese stewardesses will be on board. Aviation Investments, which comprises the companies in the Aircraft Owners Association (AOA), Demerara Distillers Ltd, Gafsons Industries, Vinelli Industries, Mings Products and Services, Harry Rambarran and Larry Singh (the last two are overseas-based Guyanese), is assuming 51% of a new company, GAC 2000 Inc, with the old GAC retaining 49% of the shares. The new company is worth US$3.5 million of which US$1.8 million is the consortium's equity and US$1.7 million the government's share in the form of the assets of the old GAC. The new operations will assume US$2.2 million in liabilities of the US$9 million debt. GAC 2000 Inc will only focus on the international route, leaving the local service to the local aircraft companies. "I am confident GAC 2000 will be riding the air with a greater degree of confidence and will show that Guyanese can manage an airline which is very competitive," Persaud said in brief remarks before sealing the financial details for the takeover. And President Janet Jagan, who was at hand to witness the signing at Park Hotel, wished the new venture success, happy that the Guyanese flag is being retained in the privatisation of the airline with a local consortium. She also expressed satisfaction with the assurances of a quality service from Persaud, hoping that the airline will be one that will make all Guyanese proud. Hinds also wished the new venture every success. Head of the Privatisation Unit, Winston Brassington, dubbed the signing historic, a sentiment echoed by Persaud because it is the first time the local private sector has entered into a joint-venture with the Guyana Government where the private sector is the major partner. Both Persaud and Brassington noted that the negotiations were tough but the thorny issues were ironed out. Details on these were scarce. Persaud said Malcolm Chan-A-Sue, who is to head the company's operation arm faces a tremendous task ahead to ensure that the operation will be second to none. "We will do a job that needs to be done. Confidence is absolutely essential in everything one does and we intend to generate that confidence," Persaud, who will also chair the board of the new operations, said. Because people would want to close their booking for the summer season by the end of May, Persaud said, the May 22, start up deadline has been set. Mekdeci acknowledged that an aggressive marketing campaign will have to be embarked on to sell the airline to patrons, but is confident that because of the niche service (non-stop flights), it will not be too difficult to win back passengers. Gouveia was to head the marketing section but he pulled out yesterday because of what Mekdeci described as internal conflicts and his own business. Mekdeci said that position will be split and will be executed by several persons. The airline will not be competing on a price basis with other carriers, Mekdeci said, indicating that the emphasis will be on service. He said the price range will be close to that of BWIA's structure. GAC had been out of the skies for the past two months after the operations grounded to a halt because of a series of problems. The privatisation and the rapid negotiations to find a strategic partner did not leave the investor group with much time to get things rolling for the summer season. However, Mekdeci assures that all will be done to meet the May 22, deadline Persaud set and confirmed that initially for six months to a year, the airline will be operating on a wet-lease arrangement. Start up, after the due diligence next week, will see the hiring of about 30 staff and less than 100 in the next six months as the operation gets cracking. Former GAC employees will be considered and if rehired, may have to undergo training. As to competition from carriers like American Airlines, Mekdeci said that to fly in the US, there has to be reciprocity and confessed that such competition can only keep GAC 2000 on its feet and provide patrons with a comparison for the carrier's service. The initial route of the airline will be New York and Mekdeci said if the new operation can get a wet-lease with a Canadian carrier it will make a big difference for this season. He noted that time is not on GAC 2000's side to get the requisite permissions to enter into dry-lease arrangements and for now wet-leases will have to do. Before the airline can commence a dry-lease service, it has to prove itself to the US Federal Aviation Administration (FAA) and the Canadian Department of Transport to get the requisite licenses. GAC 2000, in the long term, aims to have two large jets, medium to long range aircraft at its service.