They currently stand at an historic high of £50m. but are increasing at more than £50,000 a day while travel remains hit by Covid restrictions.
P&R treasury lead Mark Helyar confirmed the shortfall following Guernsey Press questions raised by the committee’s earlier launch of the States’ baseline fiscal forecast, predicting a government deficit of more than £50m. by 2025.
P&R’s ‘no more money’ presentation last week highlighted Aurigny after a chart appeared to indicate the airline’s alarming losses would fall to just £200,000 in 2023.
Deputy Helyar has now explained this is because of the recapitalisation and a public service obligation agreed with the States of Alderney, which would reduce its day-to-day losses.
‘When we refer to the recapitalisation of Aurigny, it describes the States, as the owner of the airline, covering historic operating losses,’ said Deputy Helyar.
‘The accumulated losses up to the end of 2020 were approximately £50m. and the States would look to cover the loss for this year as well – expected to be between £15m. and £20m.’
For clarity, he said, that would not involve writing-off loans issued to purchase aircraft, but would only relate to the historic losses.
‘P&R, as the creditor of Aurigny, is also working on ideas to restructure the loan and asset structuring of Aurigny to reduce depreciation and other costs which impact on Aurigny’s accounts,’ he said.
It has also emerged that the cost of the agreement with Alderney is twice that which the previous Policy & Resources was prepared to pay.
‘The PSO was not deliverable at the level of financing set for it by the previous government at the desired level of service, and a reduced level of service could have undermined Alderney’s economy,’ said Deputy Helyar.
‘The current committee agreed the PSO at a level of £2m., which made it possible to resolve the negotiations and provide certainty for the service.’