Darby's Caribbean dream at Liat

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In the first of a series of articles, Mark Darby, the newly appointed chief executive of Antigua-based Liat, looks back at his first 100 days with the Caribbean inter-island carrier

On the face of it, the chance to run an airline in the Caribbean seems like a dream come true. And in many ways the opportunity to run Liat was just that. After over 26 years in the industry and 15 years as a consultant helping airlines all over the world on all aspects of their business, latterly with Unisys, when I heard that the carrier was searching for a new chief executive, it seemed like the timing was right to put my name in the ring: time to stop living out of a suitcase, bring my experience and insight together and finally run an airline rather than just advising them.

 

I'm trying to spend some time with staff at each department - I go to them rather than asking them to come to me" Mark Darby, chief executive, Liat

However, I knew this would be no glamour posting - even though the location did make it a little easier to sell the idea to my family of moving from the UK. There is no hiding the fact that this famous carrier, which celebrates its 50th birthday in October but has only made a profit in two of its 50 years of existence, is in a chronic condition. Owned by 11 Caribbean island governments and flying a fleet of 13 Bombardier Dash 8 turboprops, Liat is saddled with a mountain of debt and outdated business and operational practices. I was aware of this, but critically saw a willingness on the part of the owners and the staff to restore this ailing carrier to health.

My mandate is simple: get the company on a good commercial footing, and run it for sound business reasons. The owners said they would not interfere, and they are being true to their word. The phone calls pressing for "that job for a cousin" or "demanding that two islands need more frequent service" just haven't come. Importantly there is a free reign to do what is needed to reach the target of making Liat profitable by the end of 2007.

The first task was to find out exactly what state the carrier was in. The resignation of the chief financial officer two days before I arrived was an interesting twist, but I brought in Alan Bryon, formerly of Fedex, to help clear the financial picture. This wasn't easy, as management accounts, audited accounts and budgets were all a long, long way behind.

Perhaps not surprisingly the hole I found was much deeper than was thought - with a loss of $15 million in the first six months of the year. As a result, the first few weeks were mostly fire-fighting, plugging obvious holes to just stop us haemorrhaging cash.

Then the reorganisation started in earnest. It began with a 100-day "Liat Get Well Plan" to tackle the first big wins. My initial assessment of the carrier that the business was operationally driven proved to be right. In the past the main question was how to fly the airline's Dash 8s as much as possible, almost regardless of whether that flying was making money or not. Now the balance is being shifted to a commercially led model where routes are flown to be profitable and where punctuality and customer service are brought to the fore.

Our route-planning team have developed a route profitability analysis tool (the route network is highly complex - so analysis is difficult to do well) for the first time and used this to bring in a new schedule in September. Some routes have gone altogether, and there were some really abysmal ones. They will not be missed. The network has also been simplified. Punctuality has been appalling, mainly due to the "island-hopping" nature of the schedule. A problem at any point in the day would lead to reactionary delays for the rest of the day. We've introduced "fire breaks" into the schedule to allow the ability to recover. Another leased Dash 8 was about to be delivered just after I arrived. When I asked why the carrier needed another aircraft nobody could tell me. The lease was cancelled.

There was a very weak marketing department. Each island manager doubled up as the station/operations and local sales manager. Inevitably the sales effort did not get the attention it deserved. That is now fixed with ex-US Airways executive Leesa Parris coming in to set up the carrier's sales and marketing operation in Barbados and a clear separation of sales and operational roles across the islands.

One of the great things about the airline is that despite its woes, Liat is a fantastically well-known name in the region and the loyalty of the West Indians to the carrier is remarkable. This is a fantastic base for the new marketing team to capitalise on and build our marketing presence.

Elsewhere in the business, some unfortunate decisions led Liat to largely lose its interline capability. The carrier had pretty much thrown away a good revenue stream. One of my first actions has been to bring in Navitaire, find out what we needed to do to reactivate our interline deals and then put a plan in place. We should be offering a "business as usual" service to our interline partners by the time this appears in print.

Overall the 100-day plan produced about 100 action items spread right across the different departments of the carrier. All will make an impact. However, another desperately needed measure has been to raise capital. Our unexpected white knight arrived in the form of the Government of Venezuela, which is keen to foster good relations with the West Indies. The Venezuelan government is to give a soft loan of $20 million to Antigua, which it is putting it into Liat as additional equity.

Paying our debts
Additionally, the carrier plans to raise another $20-25 million from the private market in new debt backed by government guarantees. This new money will keep us going, allowing the carrier to pay off expensive debt, buy aircraft parts and overhaul engines.

One of my messages to staff is that this is a make or break time for Liat. Our challenge is to run a carrier that does not have to be bailed out by the governments. Next time Liat comes with its hand outstretched there will be nothing there. I really believe that this is "the last chance saloon".

In terms of management style, I've approached this role somewhat differently from my predecessors. I'm trying to spend some time with staff in each department - I go to them rather than asking them to come to me. This is a small, tight operation and personal contact and communication about the challenge ahead is essential. My message to all staff has been: "If you see a problem and can fix it yourself, then do it if you can't fix the problem - tell your manager. If they can't/won't fix it - tell me!" This seems to be paying dividends, with many issues that had been given up on, now being fixed.

These first 100 days have been a roller-coaster introduction to running an airline. Already a lot has been achieved, but no-one is under any illusions about the task facing us. At the time of writing a number of new strategic options are beginning to emerge - whatever happens, the next six months won't be dull. ■

Mark Darby describes how he has helped forge a remarkable new direction for Antigua's Liat in his second article

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