Guernsey to recapitalise Aurigny to tune of $86.3mn
The island parliament of Guernsey has voted to write off the debts of its flag carrier Aurigny Air Services (GR, Guernsey), agreeing to spend GBP62.9 million pounds (USD86.3 million) recapitalising the company.
States of Guernsey, as the parliament and government of the British dependency of Guernsey are called, was asked to decide whether to inject GBP46.8 million (USD64.2 million) into the company and also to cover its 2021 losses, which are projected to be GBP16.1 million (USD22.1 million), a policy letter presented to members before the vote, seen by ch-aviation, revealed.
The plan – approved by 35 votes to one with two abstentions – foresees Aurigny becoming “an economic and social enabler more efficiently and more sustainably” and growing “financially self-sufficient as it recovers from the pandemic and indicates that it will start returning modest profits from 2023 onwards.” As previously reported, this partly entails ending the use of its Embraer and Dornier aircraft and simplifying its fleet in favour of Avions de Transport Régional turboprops.
Accumulated losses at the airline are forecast to be GBP72.6 million (USD99.7 million) by the end of 2021, encompassing GBP56.5 million (USD77.6 million) for the years 2015 to 2020 and the forecasted GBP16.1 million for 2021, the policy letter showed. The latter sum is higher than the previous projection of GBP14 million (USD19.2 million), due to a delay in returning to a fuller flying programme because of ongoing Covid-related travel restrictions.
“It is acknowledged that there is no realistic prospect of the airline being able to cover from future revenues the losses which have accumulated. A recapitalisation of the airline needs to be considered,” it stressed.
Aurigny took a number of steps during the pandemic to cut costs, the letter recounted, including an 18% reduction in its employee headcount, the furloughing of staff through schemes in Guernsey and the UK, and a reduction in the size of the fleet – namely, during the course of 2021, returning one ATR72-500 to its lessor and proceeding with the disposal of two Do228s.
As of mid-October 2021, Aurigny Air Services currently operates three ATR72-600s, two Do228-212(NG)s, and one ERJ 190-200STD, deploying them on ten routes linking Guernsey and Alderney (30x weekly) and the islands with the UK mainland, the ch-aviation fleets advanced and ch-aviation capacities modules show.
An Air Policy Framework for the period 2021-26, which Aurigny developed with the States of Guernsey, sets out in priority order three core objectives:
to provide security of essential routes (Guernsey-London Gatwick; Guernsey-Southampton; and, Guernsey-Alderney);
to achieve a financial breakeven result during the next five years; and,
to support the core strategic objectives of the States of Guernsey.
Aurigny Group is made up of three companies: the holding company Cabernet Ltd, Aurigny Air Services Ltd, and Anglo Normandy Aero Engineering Ltd. States of Guernsey owns all of the shares in Cabernet, which is the holdco and sole shareholder for the two other companies.
During a debate preceding the vote, Guernsey parliament member Peter Roffey pledged “exciting announcements” as part of the drive for profitability, including codeshare agreements with larger airlines, the BBC reported. Aurigny currently has them with Blue Islands, Eastern Airways, and Loganair.