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14 July 2010
Aurigny Air Services could be sold to Blue Islands
The States bought Aurigny for about £5m in 2003
Blue Islands is in discussions to buy rival airline Aurigny from the States of Guernsey.
The airline signed an "in principle" agreement with the Treasury and Resources Department to further develop terms for the possible sale.
Both parties have agreed to undertake comprehensive due diligence before any firm agreements are put in place.
Assuming a joint decision is reached, it will be subject to the approval of the whole of the States.
Derek Coates, chief executive officer of the Healthspan Group which owns Blue Islands, said he believed neither airline was viable in the longer term if they continued to run as two separate organisations with the associated high and duplicated costs.
“It would be our intention to merge the two airlines, invest heavily in new more fuel-efficient aircraft and eventually phase out the old Trislanders”
Derek Coates
CEO of the Healthspan Group
He said: "The underlying costs and overhead structures of airlines continue to increase year on year as regulation within the industry becomes more complex."
Both parties have agreed a mechanism by which Guernsey's London Gatwick slots would be protected.
They said this was for the benefit of all islanders and the economy as a whole and that a merger between the two airlines would also preserve competition on the key Gatwick route, create a viable inter-island operator and relieve the taxpayer of footing the bill of the continuing losses at Aurigny.
Treasury and Resources Minister Charles Parkinson said: "In our view it is not the job of government to own an airline particularly where a private sector option exists.
"Government should simply be there to ensure that transport policies have the island's interests at heart.
These include the protection of our lifeline routes.
No alternative aircraft
"As the shareholder representative I would, on behalf of my board, like to put on record our appreciation of the dedication, hard work and loyalty of the Aurigny Group's management and staff."
Mr Coates said: "If a final agreement is reached later this year and approved by the States it would be our intention to merge the two airlines, invest heavily in new more fuel-efficient aircraft and eventually phase out the old Trislanders as they reach the end of their natural lives.
"We will keep the best of the Trislander fleet to service Alderney, where there is currently no realistic alternative aircraft.
We believe that by doing this we can return the airline to profitability within two years."
The sale would involve the purchase of Cabernet Limited, the parent company of Aurigny Air Services and Anglo Normandy Aeroengineering, an aircraft maintenance and repair facility based in Guernsey.
The States agreed to buy the group for about £5m in May 2003.
Aurigny, the Latin name for Channel Island Alderney, was started in 1968, employs about 290 staff throughout the Channel Islands, UK and France and earlier this year it carried its nine millionth passenger.
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16 July 2010
Aurigny sale could be 'disaster' for Guernsey air links
Mr Torode said he could not see the merged airline surviving for two years
The potential sale of States-owned airline Aurigny to its rival Blue Islands would be a disaster, a former chief minister says.
Mike Torode, who also sat as president of the Guernsey Transport Board, said he was concerned for the island's vital lifeline links to the UK.
The island's States bought Aurigny to secure those links, but has now reached an agreement in principle for the sale.
Mr Torode said "it would be a terrible mistake" to lose control of the routes.
He said: "Slots at Gatwick have changed hands for more than £10m a piece, if we sell Aurigny to a competitor what a temptation for them... maybe in a year or two's time to say well we've lost a few bob over this operation but we can get it back by selling the slot.
"To sell to Blue Islands would be an absolute disaster, I think it would be for not a lot of cash and I am not confident they will be there operating as an airline and certainly operating to and from Gatwick in as little as a couple of years."
'Losing money'
Treasury and Resources Minister Charles Parkinson said the States would have to pay off Aurigny's £7m of debt before any deal went ahead.
He said: "At the moment Aurigny is losing money and the taxpayer ultimately is bearing the cost of those losses, the benefit to the taxpayer of this deal, apart from the fact that we will get something for the airline is that no longer will the taxpayer be called upon to fund Aurigny's losses."
The island's coffers would also profit from shares of the new merged airline's profits, but it may be some time before it shows a profit.
The States-owned airline suffered a £1.5m loss in 2008 and was not expect to make a profit in 2009 or 2010.
Derek Coates, chief executive officer of the Healthspan Group which owns Blue Islands, said it could be two years before the new merged airline was in profit.
He said: "We anticipate that they'll be a lot of new aircraft to be bought, a lot of re-branding if we succeed in acquiring the airline and it's in our ownership by the end of the year we'll spend next year as an investment year and I'm hoping in 2012 we'll be a profitable airline."
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14th July 2010
Flybe statement on proposed Aurigny sale
Following the news that Aurigny is being sold to Blue Islands without an open bidding process, Flybe has called for a full and independent Inquiry to be urgently convened to examine the matter in detail.
Flybe has the longest unbroken record of service of any airline to Guernsey, has provided lifeline routes to and from the island in good economic times and bad, without recourse to a single penny of public subsidy, and is very disappointed that it has not been invited to make an offer for Aurigny.
Flybe would like to place on the record that it has, since 2003, tabled a number of bids - the last of which was just 18 months ago – to acquire Aurigny.
All of these bids have contained an offer of legally binding guarantees to protect the slots at London Gatwick for Guernsey services.
To our disappointment, Flybe has been rebuffed by the States on every occasion, the most recent of which was Feb 2010.
Flybe is extremely concerned that the proposed deal between Blue Island and Aurigny will result in yet more taxpayers money being wasted on clearing debts and writing off loans.
Flybe confirms that it would be prepared to enter into an open and transparent bidding process that it believes will present a better outcome than the smoke-filled-room solution being promised by Blue Islands.
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