Treasury & Resources minister Elaine Millar said that the island’s principal objective was to secure ‘resilient and sustainable essential air links’, and it was now making good progress on achieving that, having offered Loganair money to pilot in to secure services.
‘Very considerable thought was given before ministers took the decision not to provide further financing, subsidy or to take ownership of Blue Islands. We felt this was not the best use of public funds, and that more sustainable, alternative options were available to ensure the continuation of our lifeline routes,’ she said.
Deputy Millar said that the government and the airline had been in talks behind closed doors for some time about support packages, and revealed that Blue Islands had spent the past year up for sale, supported by Jersey’s decision to defer loan repayments and providing funding to support liquidity. But it had not gone public on those talks at the risk of compromising the airline.
‘Blue Islands was unable to find a buyer without further significant funding being required by government, and it was not possible to justify taking Blue Islands into public ownership or investing further public funds into it,’ she said.
Instead it agreed to pay Loganair up to £1.5m. to be ready to come in over any time frame from 48 hours to 60 days.
‘In so doing, we have secured the future of the island’s regional connectivity. Government’s contribution to Loganair recognises that they are commencing operations during a quieter period of the year and will face substantial set-up costs, far in excess of this funding, including the need to lease an additional aircraft on a more expensive short-term basis to provide capacity while their long-term operating model is put in place.’
She revealed that Jersey had loaned Blue Islands £8.5m. in 2020, when Jersey wanted the airline to come on board to maintain its essential services during Covid. It repaid £3.2m. of this, including interest.
£7m. remains outstanding on the loan – no repayments have been made in the past eight months – and interest owed on that loan has now risen to a further £400,000.
An additional loan of £1.2m. was made in mid-September and another £500,000 on Friday 7 November – just seven days before Jersey pulled the plug on the airline.
Deputy Millar said that she hoped, as a secured creditor, that Jersey could get some money back from the liquidation process.
The minister said she would make a statement to the States Assembly at its next meeting on Tuesday 25 November, and would brief the island’s Scrutiny Committee ahead of that session.
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