Winair looking to raise capital to weather pandemic shock | THE DAILY HERALD

PHILIPSBURG–Windward Islands Airways International NV Winair is expected to become viable as the season picks up, said Prime Minister and Minister of General Affairs Silveria Jacobs on Thursday, representing majority shareholder St. Maarten Government in a Parliamentary meeting on Winair’s financial status.

The airline is currently making progress. Winair had performed around 6,000 flights this year up until October, a quarter of the number of flights performed in 2019, but recently flights have started to pick up.

“The fourth quarter is showing improvements and our forecasts for the high tourist season remain optimistic,” said Winair Supervisory Board Chairman George Greaux Jr., who stressed that the 2021 financials demonstrate the resilience of Winair’s team and continue to show promise. “The ambition is still very much there,” he said.

Although encouraging, the message was not received as such by a number of Members of Parliament (MPs). MPs Sidharth Bijlani (United People’s Party), Christopher Emmanuel (independent) and Claudius Buncamper (United St. Maarten Party) spoke prior to the meeting with Winair staff and Windward Islands Civil Servants Union/Private Sector Union (WICSU/PSU) representatives who are very upset about the layoff of personnel in 2020 and the persistent high salary cut for the remaining Winair staff.

The union and 18 members of Winair’s pilot group took the airline to court on September 1 regarding the 25 per cent reduction of the pilots’ work hours and salaries, which was implemented as per April 1, 2020, due to the COVID-19 pandemic. Winair claimed that its cost-cutting measures were absolutely necessary to ensure the company’s survival. According to the 2020 annual accounts, Winair suffered on average a 60 per cent decrease in turnover.

“As a result, the company is in debt and in financially bad weather,” said attorney-at-law Jojanneke Deelstra, who pointed out that Winair had received payroll support up to and including February 2021, but not thereafter, “presumably due to government’s financial situation.”

Winair was granted a mortgage loan of US $3 million by its minority shareholder, the Dutch government, on December 30, 2020. The loan, to which strict conditions were attached, was granted to allow the airline to pay its creditors and ultimately prevent bankruptcy.

The reduction in hours and resulting reduction in salaries was a drastic measure the company had to take to secure its future moving forward and secure employment for its employees, albeit at 75 per cent of their normal work hours and salaries, the airline said.

The Court ruled in favour of Winair. The salary reduction was not a result of the measures imposed on country St. Maarten by the Netherlands for the island to receive liquidity support, the judge concluded.

“But was it fair? Was it fair to cut salary and vacation pay 25 per cent, and take away their 2020 vacation days?” Buncamper asked. “What is the company’s position now moving forward with these pilots? How are you planning on settling these disagreements?” He called the way in which the measures were taken – overnight, without consultation with stakeholders and their union – “unethical”.

Emmanuel referred to the St. Maarten Stimulus and Relief Plan (SSRP) and listed the amounts that Winair had received in payroll support in 2020, to a total amount of more than five million guilders. “So, are you following the proper procedures with SSRP? No, you are not. Based on these figures, you are not. But because there is no oversight, and the minister of finance doesn’t have the workforce and check on these things, this is what is happening,” Emmanuel said.

Greaux had asked Parliament to consider two important facts about Winair. “The first is that it is a company that has contributed immeasurably to the economic development of St. Maarten and the surrounding islands and in the region in its 60 years of existence. In that process it has also contributed immensely to the human resource development in the aviation field in the region, especially the highly skilled pilots and maintenance crews.

“I also would like you to envision that Winair has reached an historical high revenue of US $41 million in 2019. It is the board’s belief that this company has the capacity to achieve revenues well into the $60-million- to $80-million-a-year range. Now imagine if Winair was properly capitalised 10 years ago! It is never too late, because the ambition is still very much there.”

What Winair needs, said Greaux, is a financial injection. “Winair’s Board has expressed the desire and the need to receive proper capital financing for the company to be successful post-COVID-19. We need capital to weather the post-pandemic shock and to seize opportunities deemed viable for the company.”

Following the general meeting of shareholders of November 19, 2020, a shareholder resolution was given allowing the board to compile a capitalisation programme consisting of the issuance of new shares to sell for the capital injection needed. “A share capital injection brings negative equity into positive territory, creating the ability to pay out dividend to shareholders once dividend policy and capital reinvestment requirements are met, accelerating the return on investment,” Greaux said.

His presentation was met with scepticism. Bijlani wanted to know, “How many planes does Winair actually own? What assets does the company have? After 60 years of service, where do we stand as the carrier of St. Maarten?”

Winair has submitted a request for support to the Dutch State. “This has been dealt with by the Ministry of Economic Affairs through the framework drawn up for support for individual companies,” Dutch Minister of Infrastructure and Water Management Cora van Nieuwenhuizen said in response to questions from the Second Chamber of the Dutch Parliament. “The project team that deals with this reported in June 2021 that Winair has a financing requirement of several million US dollars.”

According to her, it is primarily up to the major shareholder, St. Maarten, to consider support for Winair. “At the moment, support from the Netherlands is not (yet) on the agenda. Because of the Dutch interest in the accessibility of Saba and St Eustatius, we keep a finger on the pulse.”

The Netherlands has 10,000 shares in Winair (7.95 per cent) with a face value of $560,000, Van Nieuwenhuizen stated. “These shares have been acquired free of charge and are therefore on the balance sheet for zero euros. Their depreciation would therefore not affect the balance sheet. Winair’s hangar counts as collateral if the company is unable to repay the $3 million mortgage loan it concluded with the Dutch State in 2020.”

Winair’s hangar is valued at $6 million and the foreclosure value at $4.5 million. “That is why it is expected that in the event of Winair’s bankruptcy, the hangar will yield enough to repay the loan,” Van Nieuwenhuizen reassured the Chamber.

  Greaux gave it his best effort to convince St. Maarten’s Parliament that the airline is moving in the right direction. Exactly 10 years ago the Supervisory Board was given the mandate to show the company can be made viable and then we can see about capital financing. The company has proven the viability in spades and now would like to see the capitalisation come through for all the good deserving reasons,” he said.

Jacobs said: “We had a general shareholders meeting on August 19. A very extensive presentation was made, wherein the interest of the employees was portrayed and explained, and the shareholder was able to ask some of the same questions that were asked here in Parliament, because we were also approached by the employees of Winair as well.”

The austerity measures are to remain in place until a degree of viability returns. Once viability is achieved Winair will return to a pre-COVID level of work hours and salaries for its employees, the board assured. “Winair is confident that the situation will improve and that its pilots can be working more hours. Let us stay positive,” Greaux said.

The shareholder has asked for two weeks to provide answers to all the questions put by MPs.

Source: The Daily Herald