Thursday 19th October, 2006

 

Caribbean Airlines gets ready

No room for error

 
 
 
 
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Peter Davies, BWIA’s chief executive.

Photo: Shirley Bahadur

BY ASHA JAVEED

Anticipation for Caribbean Airlines is the countdown for 66-year-old national carrier BWIA. The execution process is well underway as negotiations between unions and BWIA’s management have been resolved and the new hummingbird logoed look launched on Monday.

With an upcoming Christmas traffic, Carnival in February followed by World Cup Cricket in March, the airline will have no room for error.

Peter Davies, BWIA’s Welsh chief executive, is assured of meeting the January 1, 2007 start-up date as he trims up the airline to its rebranded entity.

In an interview with the Business Guardian at Sunjet House on Tuesday, a confident Davies explained that Caribbean Airlines was making progress.

He glibly noted that the newspapers had been kind in recent weeks as he prepared a cup of black coffee in the company’s board room prior to this meeting. Glancing around the room, he noted that the room had held a lot of heated discussions but decisions were made.

Erasing BWIA’s history to replace it with an new entity was sharply criticised but Davies explained that he was left with little choice.

“I did not come to this decision (the shutdown) originally. The task force decided that BWIA should be restructured and I was bought in to look at that.”

Cognizant of the fact that change is always hard, he stressed that “there are lessons one learns.”

“We live in a world which is constantly changing but I suppose, at the end of the day, its always good for people to accept that. So that the cultural translation is an area which requires constant attention.

“My job is to create the right environment for other people to work to the best of their ability. The important group of people as far as I am concerned is the staff followed very closely by the customers.”

He cited communication amongst staff members and customers as the most important link to proper working environment.

“Try and never leave anyone in doubt as to what is happening. Unfortunately, in the last few months that has not been the situation because the negotiations have been somewhat procrastinated with the union, it was all very difficult to communicate.”

“It’s very difficult for them at the moment because they are going through a level of anxiety because a lot of them know they won’t work in the new airline, a lot of people face retirement and not everyone wants to come back and work for Caribbean Airlines and that’s perfectly understandable.”

How do you detach the clinical from the emotional?

“That’s a leading question, I could write a book on that one,” he laughed.

“My job is to de-confuse that I suppose and make it more personable. Always try to understand the other person’s point of view. You may not agree with it but that is how I try to run the union negotiations where I didn’t agree with what they were saying.

“There is a very thin dividing line between being autocratic and being sort of impersonal or not giving the impression that you are interested. As opposed to going to the other extreme and I have to strike that balance between the two. Show compassion and show empathy.”

It is Davies personality—a mix of business acumen, self-deprecating humour and foresight—which is important in effecting transformation.

“I always see myself a bit like a harbour pilot. My job is to bring the ship in, get it to turn around and head back out to sea.

“I quite enjoyed that because it is quite dynamic, there is never an opportunity or time to get bored and you’re constantly looking for ways which you can improve things. I like the cut and thrust of that business.”

The emerging

Caribbean Airlines

Getting a logo was just the beginning to creating a solid brand for the airline.

“I was trying to make it obviously Caribbean but also I wanted to make people understand where the roots of the airlines are in a subtle way and that is why I favoured the hummingbird. That’s also why I favoured the T&T flag going on the aircraft along with the Caricom flag. I really wanted to make sure people understood that the roots are here.”

The sentiment has meet with a 90 per cent approval rate, he acknowledges.

But Davies target, while still loyal BWIA travellers, has widened to include former disgruntled passengers.

“We do know that for every one passenger that travels in BWIA there are ten disgruntled passengers so we need to attract those people back and earn their trust in the hope that Caribbean Airlines will be much better than BWIA and we can reclaim those passengers.”

And while the marketing for the new company will be unraveled in the upcoming weeks, he pointed out that management was ironing out details.

At least 93 per cent of the company’s 1,800 employees had signed up for VSEP packages and a regional recruitment will begin next week.

Local would-be employees could have submitted applications from yesterday.

“A lot of people want to work in the airlines and we want to make sure they have the opportunity to do so,” Davies explained of hiring regional workers.

“We are obviously looking for the best people. There are a lot of people who have worked for BWIA and left for various reasons. When you’re running any company you want to make sure everybody has the opportunity to apply and we want to cast the net as wide as possible.

“I am sure that the majority will come from BWIA staff and I am not precluding them whatsoever. But I think equally we should give other people the opportunity to apply as well.”

And the staff that was once 1,800 will be kept to about 550 people and salaries, which was once the company’s biggest bill, will average about 35 per cent of expenditure.

He noted that the fuel bill in recent months has overtaken the salary bill but with oil now less than US$60 a barrel there is a reduced percentage.

“With oil, there is no logical answer. The situation is real and then something like Lebanon happens which surprises everyone, you can’t gauge for that,” he said referring to fluctuating oil prices.

“You obviously do have some idea about prices anticipated and unfortunately those issues are not going to go away quickly. You can’t make an intelligent guess, it’s pretty difficult.”

Fuel is estimated to account for about 25-30 per cent of the company’s expenditure.

The Government has injected more than US$250 million for BWIA’s restructuring which will be paid out in VSEP payments and other debts the company has accumulated.

In June, Cabinet approved an additional US$100 million to meet the equity injection for the recapitalisation of the airline.

“The VSEP is a confidential figure between the shareholders and the union but certainly the important thing we have sufficient cash to pay for VSEP and also to satisfy all the creditors of BWIA.”

“The creditors include leasing companies, fuel (which is up-to-date) and some suppliers that we have not been able to pay because we have insufficient cash flow. We are working through our process at the moment.”

More than that, the company has to now market itself and this will be done with a mixture of press advertisements and radio.

“We need to reassure everyone because there is still some doubt about the airline. And that is understandable that people are questioning any ticket issued by BWIA or BWIA miles. If you fly out on December 31, you are going to come back with the same aircraft. Only it will be Caribbean Airlines.”

Last month, BWIA cut its Washington route which Davies explained was not successful because it wasn’t making money.

He said the company would maintain the routes it now operates and build efficiency from there.

“What I am looking to do is to create a solid base which allows the existing routes to be serviced properly.”

He noted that Liat and Caribbean Star were in possible merger talks and from an intercontinental perspective airlines like Condor and American Airlines were getting stronger financially.

“So they are in a better position to spend more money on marketing. We have to keep ahead otherwise we will get behind,” he said as Caribbean routes accounted for about 50 per cent of BWIA’s business.

He observed that the US Government’s decision to mandate its citizens to have passports travelling to the Caribbean will have an impact.

“To what extent, no one really knows. We have to gauge that and take account of how that affects our business. Having said that a lot of BWIA traffic are T&T nationals and visiting friends and relatives. The American market has not been huge for us.”

Davies said his commitment is not an egocentric decision saying, “I thought there was an opportunity here to use my style of management and try and turn the company around. It’s just the opportunity to create something and to provide assistance perhaps.” AJ

 

 

 

 

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