“No more adventures” as Winair returns to core business

POSTED: 03/23/11 12:51 PM

St. Maarten / By Donellis Browne – The Chairman of the Ad-hoc Committee on Winair established by the airline’s shareholder representative – Prime Minister Sarah Wescot-Williams – has confirmed the airline will be returning to its core business of flying to Saba, St. Eustatius and St. Barths. Michael Ferrier said the move is part of wider effort to “ensure the airline’s survival and that as many jobs are possible are maintained.”

“Basically we don’t want to have any more adventures so the airline will return to its core business. We also plan to look at the cost of leasing versus buying planes, restructuring the airline’s debt and how we trim the overall expenses of running the airline,” Ferrier said.

The shareholder representatives for the Dutch government are especially keen to keep Winair flying to Saba and St. Eustatius as they believe it is the best airline to operate the routes, based on the aircraft in the fleet, the airline’s safety record and the expertise its pilots have built up when it comes to landings at special types of airports such as the one on Saba.

“The Dutch consider Winair their best option and have found no one else that fits the bill for operating the service. They want to ensure that the connection stays as good as it is, but they don’t want that to happen at the expense of Winair. There have already been some price changes to reflect the cost of flying the route and while they don’t want to see the prices go out of whack, they support the airline coming to a true cost of flying these routes and determining what is commercially viable. Once that happens and the Dutch want more flights, then they’ll have to pay for that,” Ferrier said.

Efforts have already begun to reduce the number of destinations that Winair services. As that has progressed two destinations Ferrier did not name due to ongoing negotiations have approached the airline to keep their service running. The airline’s leadership will evaluate performance on these and all other routes and will eventually offer to continue providing service if the destinations are willing to enter revenue guarantee agreements that allow the airline to break even or make a profit.

“It will no longer be so that a flight will cost us let’s say 700 dollars to operate and we accept sales of only 400 dollars in seats. We also have to bring Winair’s expenses in line with what the airline generates,” Ferrier said.

The process to make changes on the day to day basis will be guided by a team of change managers that will include the company’s current Managing Director Edwin Hodge. One of the persons that will be added has a background in aviation and someone who has a financial background. The former board hinted in a January 18 statement that Michael Cleaver, who was once the station manager for American Airlines, will lead the team of change managers as the President Director, that Hodge will become Chief Operations Officer and that Robert Gibs who sits on the Ad-hoc committee will become the Chief Financial Officer. Ferrier did not confirm any of this as the names have been sent to the Corporate Governance Council for advice.

He said, “This has not yet been finalized.”

One of the change management team’s first task will be to report on the airline’s actual financial position within 30 days. Ferrier said that is not possible right now because the company is at least 2 years behind on submitting audited financial accounts. The group will also have to make an assessment of the airline’s expenses and debts in close collaboration with all the airline’s stakeholders. No money will be injected before these key assessments are finalized.

“We can’t talk about a cash injection without the books being up to date. One thing for sure is that we will have to talk to all stakeholders like the union, the banks, the airport, the receivers to see how we can ensure Winair’s survival and that as many jobs as possible are kept,” Ferrier said.

The committee chairman made it clear that the new leadership will approach staff cuts carefully and in consultation with the union.

“We will have to look at the cost of staffing as part of the overall assessment of all the expenses of Winair. I don’t want to make any definitive statements on that at the moment, because we need time to really look at the situation,” Ferrier said.

Board transition

Ferrier also addressed the matter of the resignation of the Supervisory Board of Directors in a statement early Tuesday pointing to what he considers “sufficient reason for the former Board of Directors was asked to resign.” He also wrote that the accusations leveled by the former board following Monday’s shareholder meeting are “bizarre.”

In their statement the former board said they and their attorney argued that the meeting was not called in accordance with the airline’s articles of incorporation and that the shareholder representative, Prime Minister Sarah Wescot-Williams, never provided the national decree installing the ad-hoc committee, never provider the updated shareholders registry to show that St. Maarten and The Netherlands own 92.05 percent and 7.95 percent respectively of the airline’s shares. These figures were published in the Gazette of the Kingdom of the Netherlands on September 21, 2010. The board also protested the fact that the government has claimed ownership but refused to provide a letter of comfort so the airline could get a loan.

In a detailed reply Ferrier asserted, using examples, that the board seemed not to be fully aware of the company’s articles of incorporation and that they also had failed to carry out their duties. His first example was that the former chairman of the board Fernando William asserted that the meeting should be held in Curacao. This is based on articles that pre-date an amendment of November 14, 1983. Since then the meetings can be held in Curacao, St. Maarten, Saba or St. Eustatius.

“This in itself showed that the gentleman was not aware of the current by-laws of the company,” Ferrier said.

The two other examples Ferrier used to show the “lack of awareness” were an association by William that he should chair the meeting and that the prime minister did not have the proper authorization to call the meeting. Ferrier rebutted that the articles mandates chairmanship of the annual general meeting of the shareholders to the chairman of the board, but that provision does not apply because this was an extraordinary meeting of the shareholders. Ferrier also pointed out that the prime minister, acting as Shareholder Representative, asserted that the meeting was convened at her instruction and she has the power to do so. Wescot-Williams is on record that she could call the meeting because the board had failed to do so within a stipulated 14 day period from the day she requested it.

Ferrier asserted that the board had also failed in its duties by not convoking mandatory annual meetings of the shareholder for more than four years, left it unmentioned that he’d ignored the shareholder representative’s request to organize a shareholder meeting in January 2011 and refused to meet the prime minister on two occasions, notwithstanding her invitation for him and his board to do so.

“ There are ample other reasons, backed up by at least two independent reports, why the two new Shareholders could have absolutely no confidence in the abilities of the former WINAIR Supervisory Board to bring about the necessary changes in the airline thereby guaranteeing its viability,” Ferrier wrote without listing the other reasons.

Way Forward

Ferrier’s name is on the list of candidate board members that has been sent to the Corporate Governance Council for advice. He’s been frank that he does not really want to return to the board, which he sat on already.

“We only submitted my name because we needed a minimum of three people to submit and there was some delay in getting the name for the Dutch government. That makes it four people and I am perfectly happy to just advise the prime minister on how to make the changes we need to make Winair a viable and successful airline,” Ferrier said.

 

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