Aurigny asking States for £46.8m. in recapitalisation

AURIGNY needs £46.8m. from the States to re-capitalise the company, and a further £16m. is expected to be needed to cover the 2021 losses.

Aurigny chief executive Nico Bezuidenhout said the airline wants to ‘reduce the average cost of air travel and make its service more accessible, and more affordable, to more travellers to and from the Bailiwick’. (Picture by Peter Frankland, 29983662)
Aurigny chief executive Nico Bezuidenhout said the airline wants to ‘reduce the average cost of air travel and make its service more accessible, and more affordable, to more travellers to and from the Bailiwick’. (Picture by Peter Frankland, 29983662)

But the airline is aiming to break-even from 2023, under a new plan to reduce costs and grow passenger numbers by providing better travel options, helping to boost tourism and potentially offer cheaper fares.

The financial details come as the airline has outlined its future plans, with Dorniers set to be scrapped in favour of ATRs and the jet’s future under review, as Aurigny tries to streamline its fleet.

Aurigny chief executive Nico Bezuidenhout said: ‘Ideally, Aurigny wishes to reduce the average cost of air travel and make its service more accessible, and more affordable, to more travellers to and from the Bailiwick.

‘This will improve our own competitive position and enable us to be more effective as a social and economic enabler. An overall, price-competitive offering for Guernsey as a destination will however require collaboration throughout the tourism value chain, and in this regard Aurigny is looking forward to working with all stakeholders.’

A policy letter was published yesterday, with States Members being asked to formally agree to transfer money put aside to cover accumulated losses made by Aurigny up to 2020 and for the current year.

The transferred funds will be used by Aurigny to settle its overdraft facility with the States.

Aurigny’s accumulated losses between 2015 and 2020 and its projected loss for 2021 total £72.6m., of which nearly half – £30.6m. – has arisen due to the impact of Covid-19 on travel. Another £16.3m. is attributed to the operation of Alderney’s lifeline services, and a further £5.3m. is due to ‘writing down’ the value of its aircraft, mostly as a result of the pandemic.

Some of the £72.8m. loss has already been covered by existing funds, but two thirds of it still needs to be paid.

The pandemic’s unpredictable nature has made predicting 2021 losses difficult.

The loss was expected to be £14m. in the budget, but this rose to £18m. as the new waves of Covid hit. The summer recovery has helped reduce this back to £16.1m., but it is unclear what could happen in the next few months.

This year’s losses will be covered by a transfer from the General Revenue Reserve, once the final trading position is confirmed.

The proposed recapitalisation does not affect loans taken out by Aurigny to fund aircraft acquisitions, which it is continuing to repay as part of its normal operations.

The policy letter was sent jointly by the States’ Trading Supervisory Board and Policy & Resources.

STSB president Peter Roffey said the formal transfer of funding set aside to cover Aurigny’s trading losses would put the airline on a sound financial footing as it looked to recover from the pandemic.

‘That has had an enormous impact on air travel, not just in the Bailiwick but the world over, and reminded us once again of the enormous strategic importance of the island owning its own airline,’ he said.

‘Aurigny’s business strategy is now looking to return the company to profitability within the next two years, which is very welcome.

The policy letter also seeks to ratify the of the new Air Policy Framework for the next five years.

It sets out the high-level strategic objectives for maintaining and developing the island’s air links, within the context of the current quasi open skies policy, and the roles of the different States bodies.

P&R’s treasury lead Mark Helyar said the framework would give greater certainty for all operators, and should ensure stability in the local air transport market.

‘After more than a year where hardly any air travel has been possible, it is even more important we have the framework in place, one that strikes the right balance between supporting our most important existing routes and enabling new opportunities,’ he said.

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