AURIGNY should be turning a profit within two years, its managing director has said.
Malcolm Hart (pictured) was speaking after it was announced in last week’s Budget that the States-owned airline looks set to record significant losses again.
It was running at an operating loss of £1.2m. for the year up to September after posting a £1.5m. deficit in 2008.
Fuel costs had hit its bottom line hard. But Mr Hart said Aurigny could be back in profit by 2011.
‘Willie Walsh, the chief executive of British Airways described the 2008-2009 trading period as “…the most difficult year in the history of the airline industry”. We are disappointed with the 2009 figures but can only emphasise Mr Walsh’s statement that this was a most challenging and turbulent time to be operating an airline – in fact it is estimated that the industry lost $16bn during this period,’ said Mr Hart.
‘Aurigny operates a lifeline service for Channel Islanders to a number of major destinations for 52 weeks of the year and annually generates millions of pounds for the Guernsey economy. We spent £3.2m. with Guernsey and Alderney airports during this period.
‘Unfortunately, the US dollar/sterling exchange rate plus the rise in fuel prices (£600K over budget in this period) had a direct and profound effect on all areas of profitability. While keeping fares down we were forced to spend £1.1m. more on fuel than in the same period in 2007.’
Aurigny took delivery of two new aircraft this year and Mr Hart said that had enabled it to launch new routes from Guernsey to East Midlands and Jersey to Stansted.
‘These activities have replaced our reliance on the wet leasing and charter markets, both of which are very depressed,’ he said.
‘This year, we are on course to carry 4% more passengers to and from Guernsey, and 9% more passengers in total compared to 2008, in a year that is seeing the vast majority of established carriers downsizing significantly.
‘Because of the new aircraft, new routes and the continued commitment from our dedicated air and ground crew, we expect to fare better in 2010 and believe that we will be back in profit in 2011.’
Flybe has long been a critic of the States ownership of Aurigny and head of PR Niall Duffy said taxpayers’ money would be better used promoting the island instead of ‘propping up a failing airline’.
‘At the risk of sounding like a broken record, Flybe has consistently questioned the wisdom of a publicly-owned, publicly-underwritten airline in Guernsey, or indeed anywhere in the world,’ he said.
Treasury, as Aurigny’s sole shareholder, said the airline’s results reflected it having to operate in difficult and competitive market conditions.
Article posted on 26th November, 2009 - 11.30am
2 Article Comments
I’d still love to know who had the bright idea of the States buying Aurigny and then retaining the existing management.
I know the economic conditions are less than favourable but they were losing money years ago.
I guess proven experience with running the airline at a loss is a benefit to the island…
Report abuse
Surely the States should consider merging Aurigny into Blue Islands or at least retaining a significant minority stake or “golden share” to ensure that the Gatwick routes are protected.
Blue Islands competing with Aurigny on the inter-island route is utter madness. Neither of them can be making any money on that route at the moment.
I actually like Aurigny’s service, especially to Gatwick (although £336 for a day return to Manchester recently is surely taking the p*ss for a plane that was half-empty), but let’s look at why Blue Islands might be a better shareholder in Aurigny than the States.
Blue Islands have a strong vested commercial interest in making our national airline a success. Their group has strong tourism and trading interests here. Their customer service levels are excellent. They have been able to invest in far better and newer planes for the inter-island route. They are running a very useful and efficient Geneva/Zurich route. They could do a lot more. On the other hand Aurigny are continually under pressure BECAUSE they are States-owned, and cannot operate as effectively as a private business can. A merger of the two airlines would make a lot of sense to result in one very commercial, modern airline which has everything going for it.
It was the right decision for the States to buy Aurigny at the time and it should be seen as a vital strategic investment albeit one which runs at a loss. It was the best deal on the table when the deal had to be done to secure Gatwick. But times have moved on. It may not be the best deal now to retain it, and Blue Islands are not fly-by-nights – they have proven that they know how to run an airline in this part of the world, and have been able to put their money where their mouth is.
The only thing missing is a direct flight to London City Airport and/or to Heathrow, but we can’t have everything !
I’d even go so far as to suggest that the States should retain say 35% of a merged airline and commit to investing £500k a year in it as a grant for the next 5 years to guarantee that its a success and to establish certain new routes, such as London City and/or Heathrow (if ever feasible), or maybe Paris if Heathrow isn’t an option. That’s probably a better deal than retaining Aurigny and making it compete with Blue Islands in the current market.
And at the same time the States in both Guernsey and Jersey should abolish inter-island landing taxes to encourage greater use of inter-island air links in conjunction with onward connections offered out of one island but not the other, making all those marginal routes far more viable and sustainable.
Report abuse