Statement released on the future of the Aurigny Group

Thursday 15 July 2010

In a joint statement released today, the Treasury & Resources Department and Blue Islands confirm that they have reached ‘in principle’ agreement to further develop terms for the possible sale of the Aurigny Group. The next stage in the process is for both parties to undertake comprehensive due diligence.

Assuming a joint decision is reached to progress the proposal, it will be subject to the approval of the States.

The parties have agreed a mechanism by which Guernsey's London Gatwick slots would be protected for the benefit of all islanders and the economy as a whole. 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 the continuing losses at Aurigny.

Treasury & Resources Minister, Deputy 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”.

Deputy Parkinson continued “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 which have always been key strengths of the Group.

Mr Derek Coates, CEO of the Healthspan Group that owns Blue Islands said “The underlying costs and overhead structures of airlines continue to increase year on year as regulation within the industry becomes more complex”.

He stressed that in his view neither Blue Islands nor Aurigny are viable in the longer term if they continue to run as two separate organisations with the associated high and duplicated costs.

Mr Coates added: “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”.

Mr Coates added: “we have already demonstrated our faith in the visitor economy by investing in various Bailiwick hotels. This new initiative forms part of our investment strategy that will benefit the Island’s economy as a whole and we anticipate this being the start of a bright new future for a combined ‘Channel Islands friendly’ airline.”

Blue Islands will now enter into a two month due diligence process where they will be given full access to the Aurigny Group’s accounts before making a final commitment. The States will also be undertaking due diligence on Blue Islands.