Profitable Liat close to completing search for new CEO

Miami
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Liat is expected to soon finally appoint a permanent chief executive, more than a year after former chief Mark Darby left the Antigua-based regional carrier.

Brian Challenger has served as Liat's acting CEO since Darby's contract ended in April 2009. Challenger, who has led the carrier back to profitability after several years of consecutive losses, says a decision on a permanent appointment is imminent.

"I was asked to hold onto June. I expect a decision in the not so distant future," Challenger told ATI on the sidelines of last week's Low Cost Airlines World Americas conference.

Challenger declined to say if he would be willing to stay on as permanent CEO. Challenger was on Liat's board for three years before taking over the acting CEO position but this is his first experience as an airline executive.

"Sitting in the chair on a day-to-day basis is different. There are a lot of operational challenges that I wasn't aware of," he says.

Challenger is proud to point out that in 2009 Liat posted its first profit in about 10 years. He declined to provide specific figures but Liat ended the year with a "small profit" on both the operating and net levels.

Challenger says Liat cut capacity by "a little over 10%" last year, which helped the carrier better match demand. He says lower fuel costs also drove down overall operating costs, improving Liat's profitability. He says Liat was also fortunate in that there were no external factors in 2009, such as hurricanes, impacting operations.

He acknowledges that revenues were down but yields were improved and ancillary revenues were up. Challenger says the increase in ancillary revenues was mainly driven by the introduction of a fee for a second checked bag which was introduced in 2008.

He says Liat has borrowed several elements of the low-cost business model but will never fully take on the budget airline model. He points out 25% of Liat's business is feeding long-haul full-service carriers which serve the Caribbean.

Charter revenues, which account for about 5% of Liat's total turnover, were also up in 2009. Cargo revenues were not significant as the carrier has limited belly cargo capacity and no freighters. But Liat is starting to focus more on cargo and is now in the process of converting one of its Bombardier Dash 8 Q100s into a freighter.

"It [cargo] is not a big item for us. We intend to expand it. We think it will be profitable," Challenger says.

Liat hopes to remain profitable in 2010 but Challenger acknowledges the carrier has been impacted by the recent devaluation of the euro, which could drive down visitor traffic throughout the Caribbean. "It's never an easy ride. The fall in the euro is already hurting us with forward bookings," Challenger says.