The airline will require a further injection of capital from the States after falling into the red again this year.
Treasury lead Charles Parkinson told a Scrutiny hearing yesterday that ‘there will be a recapitalisation of Aurigny eventually’, with its losses expected to reach £15m. across 2026 and 2027. The States has already provided Aurigny with two rounds of recapitalisation over the past 11 years, effectively writing off accumulated losses of about £90m.
The latest bailout was not included in Policy & Resources’ draft 2027 Budget, published earlier this month, and the exact figure required and its timing are unknown.
The States Trading Supervisory Board, which acts as the shareholder in Aurigny, is encouraging the Economic Development Committee to submit proposals to the States about the future of air policy generally, which it believes could help clarify the airline’s role and expectations.
Aurigny made profits in 2022 and 2023 after years of losses, but latest estimates show the airline losing a total of £9.7m. in 2026 and a further £5.7m. in 2027 to add to losses of nearly £13m. in the previous two years.
Declining passenger income as a result of British Airways’ new service to Heathrow and rising fuel prices are two of the reasons blamed for the latest losses.
STSB president Mark Helyar told the latest Guernsey Press Politics Podcast that the airline’s current predicament could not continue and suggested that one possibility was to subsidise all air travel more transparently.
‘One of the ideas that we’ve thrown on the table is running the airport at a loss instead of the airline, and then everybody would get cheaper landing fees and there would be more competition.
‘The problem at the moment is, there is no visibility on where the losses come from or the forces which are causing them,’ said Deputy Helyar.
Earlier at the Scrutiny hearing, Deputy Parkinson speculated that an income windfall from international company tax changes could be even greater than revised estimates released recently.
P&R announced three weeks ago that the States expected to receive additional revenue of about £250m. – rather than between £30m. and £120m., as previously estimated – from the first three years of Pillar Two tax receipts.
‘I have been saying for years that the Pillar Two estimates were too low and so it has come to pass. We have relatively robust data on what companies’ profits look like, though I expect more and more information will come to light and may result in further upward revisions,’ said Deputy Parkinson.
The Scrutiny panel challenged him on the potential for even higher Pillar Two receipts.
‘I suspect so – that’s my gut feel,’ he said.