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States rescues Aurigny from threat of liquidation

States rescues Aurigny from threat of liquidation

Saturday 16 October 2021

States rescues Aurigny from threat of liquidation

The States has bailed out Aurigny from the brink of liquidation - with politicians warning that the airline is now in "the last chance saloon".

Aurigny's accumulated losses since 2015 - when the airline was last re-capitalised to the tune of £25m - and its projected losses for 2021 total £72.6m. £30.6m of that has been attributed to the disastrous impact of Covid-19 on travel.

New Aurigny CEO Nico Bezuidenhout has announced Aurigny’s 'path to profit', which forecasts a loss of £1.4m in 2022, followed by a marginal gain of £0.3m in 2023.

The airline’s boss has stated there is “no intention” to ask for any more money from the public purse. He says the new business plan is built around “doing more with less” to achieve financial sustainability.

The request to re-capitalise its outstanding trading losses was badged by some as a "vote of confidence" in Aurigny's new management team to deliver on its words after years of management failures and poor decision-making. 

nico Bezuidenhout

Pictured: “The overarching strategy is about doing more with less, through simplification and leverage. With a simplified fleet not only is cost reduced, reliability and dependability are improved,” said Mr Bezuidenhout of Aurigny's 'path to profit'.

Deputy Peter Roffey, the President of the States’ Trading Supervisory Board, which is Aurigny’s shareholder, argued that the bid for re-capitalisation was to cover historical losses and those suffered during the pandemic. 

While the States acts as guarantor for Aurigny’s private lending, he emphasised that the States was not being asked to write off those commercial loans.

Treasury Lead Mark Helyar told the States the vote before members was effectively “a gun to the head”. 

“We don’t have a great deal of choice with this, “ he admitted. “It’s do this or Aurigny goes into liquidation.” 

Mr Bezuidenhout and his team have won over States members in recent weeks, appearing to inspire new-found confidence in the Chamber. 

Aurigny Dornier

Pictured: Aurigny currently has two Dornier 228s that support Alderney’s lifeline route in and out of the island. Deputy Peter Roffey said that investigations had found there were no technical obstacles to extending the island's runway in order to accommodate ATRs, in line with Aurigny's stated ambition to move to a one-type fleet. 

It was Deputy Steve Falla who showed the most significant conversion. A fortnight ago he asked P&R why it had not “looked at ditching Aurigny”, questioning whether there were more cost-effective ways of keeping Guernsey connected.  

“The Economic Development Committee was given a solid presentation by Aurigny of its strategy for the future which has given me a deeper insight into the art of the possible,” he told the Assembly yesterday. 

“I’ve been persuaded by the calibre of the MD [Mr Bezuidenhout] and and his vision for Aurigny. I have come to the conclusion that the re-capitalisation is worth going for and is something I can support.

“I am optimistic but at the same time recognising that this is probably the last chance saloon for the public ownership of the airline.”

The vote to re-capitalise Aurigny was approved overwhelmingly by the States, with Deputy Lester Queripel the only one whose concerns materialised in a vote against the propositions. 

The States-owned airline has now been re-capitalised to the tune of around £100m by the States since its purchase. In explaining his objections, Deputy Queripel said he had heard promises from Aurigny time and time again and had no reason to believe things would be any different this time.

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Posted by Nicholas Mahy on
I am sure that Guernsey residents will be delighted to know that, on average, each one of them is to pay about £1,000 to bail out Aurigny. Deputy Helyar was wrong - there was a choice, and liquidation would have been the better one.
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