Passenger movements fell by million in 2020 – Ports

Passenger movements through the airport and harbour dropped by nearly one million last year compared to 2019 as pandemic-related travel restrictions hit the travel sector. The crisis triggered overdraft facilities for the business last year and into 2021, plus the drawdown of all of its funding reserve previously used for capital investment.

It could also potentially take until the end of 2022 to recover 90% of pre-pandemic levels of passenger movement by air and by sea, according to Guernsey Ports’ latest business plan covering 2021 to 2024, underlining the challenges ahead as it charts a path to recovery.

‘The need to find a mechanism for both recapitalisation and more sustainable future funding has never been more essential and forms one of the major objectives of our 2021 Business Plan,’ said the document.

Highlighting the impact of Covid-19, the plan detailed the business’s financial position. The ports generated an annual turnover of £23.3m. in 2019 with ordinary expenditure of around £20.1m. in that same year. It represented an operating surplus of £3.2m. in 2019, which was returned to a holding account that held a £6.5m. balance at the end of that year.

Turnover figures would be ‘substantially lower’ in 2020 and 2021 as the impact of reduced passenger volumes continued, while the pandemic’s impact had rapidly depleted the business’s reserves.

‘These significant cash deficits within Ports led to short-term borrowing in both 2020 and 2021 from the States of Guernsey. The full extent of this borrowing and the accounting treatment thereof remains under discussion. However this valued and critical source of funding has enabled Ports to continue to function and to invest in its most critical assets.’

To this backdrop, the business plan highlighted measures being taken to manage the situation and potential borrowing options for capital investment requirements.

All capital investment requirements were regularly assessed and prioritised depending on resources available and cash flow. The aim for 2021 was to invest around £4m. in ports assets, with future capital kept under review.

‘As the future capital investment programme for St Peter Port and St Sampson’s Harbours is developed, borrowing, using the asset base of Guernsey Ports as security, should be explored,’ said the document. ‘However, it is imperative that the financial performance of Guernsey Ports is maximised to ensure that the immediate capital programme can be sustained.

‘Effort will be applied in both minimising operating costs and in diversifying income away from aeronautical or maritime revenues; not least as increases in aeronautical or maritime charges are likely to act as another deterrent to increasing the number of regular travellers.

‘This position, given Covid, is not sustainable and it is now abundantly clear that re-capitalisation of the Ports is necessary, and this forms an essential short-term priority for this plan.’