Antiguan prime minister, Gaston Browne, has wanted LIAT will be liquidated following years of financial losses.
The regional airline is expected to be replaced by a new, “leaner” carrier.
Addressing local radio, Browne said: “Covid-19 has increased losses exponentially.
“You would have found that since Covid-19, the planes have been grounded, they have to pay the lease payments and they are not getting any revenue.
“A decision will have to be made to collapse it and then maybe the countries within the region will have to come together to form a new entity.”
The prime minister said there will be a meeting of all shareholders shortly.
He added that he hoped the new entity could secure a mixture of public and private capital.
Leeward Island Air Transport was established in 1956 on the island of Montserrat, before Court Line Aviation of the UK acquired control and renamed the airline LIAT in 1971.
Ownership of the airline was acquired by 11 Caribbean governments three years later.
Commercial passenger services at LIAT are currently suspended until at least July 15th.
Chief executive, Julie Reifer-Jones, recently said, while territories have begun to announce reopening dates, extended quarantine restrictions are impacting the demand for travel.
LIAT operates a fleet of ATR 42 and ATR 72 aircraft across a regional network of 15 destinations.
It is owned by regional shareholders, with the majority being the governments of Barbados, Antigua & Barbuda and St. Vincent & the Grenadines.
Image: Markus Mainka/DPA/PA Images