Newly released documents detailing the months leading to the demise of Blue Islands have revealed a far more complex decision-making process than many islanders realised – with multiple rescue options on the table, including the possibility of Government ownership, an acquisition by Loganair, and a bailout that would have kept Blue Islands flying.
Express breaks down the process…
Early financial strain and the start of the sale process
Concerns about Blue Islands’ finances began surfacing last year.
In October 2024, the airline notified Government that it was facing cashflow pressure and sought to redraw on its Covid loan facility – something that was deemed “not legally possible”.
Blue Islands also confirmed that it had formally entered a process to sell the business.
In December 2024, Government deferred repayments on the existing Covid loan and asked Ports of Jersey to defer airport fees to keep the airline afloat during the sale process.
By early 2025, the company entered a payment plan with Ports of Jersey, and officials from Treasury and Ports maintained close oversight through board meetings up until the final scheduled board meeting before liquidation.
Three initial options emerge
On 12 June 2025, Blue Islands approached Government with three potential routes forward:
- Sale to Loganair
- Sale to Aurigny
- Additional Government support to Blue Islands
On the same day, the Government held an introductory meeting with Loganair.
Over the next two months, advisers were appointed to conduct a formal options evaluation – including a “do nothing” scenario.
As the summer progressed, Blue Islands confirmed that it could no longer meet the terms of its payment plan. The airline requested a continued deferral of payment of airport fees and loan payments to Government.
By 28 August, advisers concluded that Loganair’s proposal was identified as the “most compelling proposal submitted by any alternative airline” due to its ability to offer scale, better operational resilience, and clear consumer guarantees – including the ability to provide a replacement aircraft within four hours of a technical failure.
Aurigny’s counter-proposal was ruled out due to the likelihood that it would require further taxpayer support in future.
Loganair vs Blue Islands: Two competing visions
On 29 August, Loganair was given four weeks to complete due diligence and submit a confirmed proposal.
Meanwhile, Blue Islands’ financial situation worsened and the airline requested £1.2 million in additional funding and further payment deferrals on 11 September.
A sub-group of the Council of Ministers consisting of Chief Minister Lyndon Farnham, Treasury Minister Elaine Millar, External Relations Minister Ian Gorst and Economic Development Minister Kirsten Morel agreed to provide £1.2 million on the understanding that further funding was likely to be required in October.
Further deferrals were also agreed, without which Blue Islands would “likely have ceased trading”.
On 14 October, Loganair submitted two formal proposals:
1. A Government-led transition of Blue Islands into Loganair
This would involve Government meeting the net liabilities of Blue Islands prior to the transition and Government paying certain costs to keep the business running during the transition.
In return, Loganair offered a long-term profit-share arrangement that could eventually help the Government recover the outstanding Covid loan.
2. A contingency plan
This option would mean that, if Blue Islands went into liquidation, Loganair would quickly step in and provide “substantially similar” services within 30 to 60 days.
Ministers agreed that further clarification was required on the two Loganair proposals to enable a long-term decision on the options under consideration.
On 24 October, Blue Islands requested additional £1.5 million of funding and continued deferral of amounts owed to Government and Ports of Jersey.
Meanwhile, Blue Islands put forward its own survival plan: continued government funding, and for Government to take the business into public ownership to protect taxpayers’ interests.
Following discussions, Loganair submitted final proposals at 5pm on 12 November. These indicated that, in the event of a Blue Islands liquidation, a “substantially similar schedule” could be provided by the Scottish airline within 48 hours.
Why Ministers rejected further support
By mid-November, three options remained:
- Acquire Blue Islands and transfer operations to Loganair.
- Take Blue Islands into public ownership.
- Allow liquidation and activate Loganair’s 48-hour contingency plan.
Advisers warned that both the transitional Loganair acquisition model and the public-ownership model carried substantial upfront costs and uncertain long-term recovery prospects.
The Government’s Covid loan alone still had £7.4 million outstanding – £7 million capital and £400,000 interest – plus £3.2 million owed to Ports of Jersey in airport charges at the time of collapse.
Ministers also noted the significant risk that taking ownership of Blue Islands could require ongoing taxpayer funding, particularly given the airline’s recent pattern of major maintenance-related losses.
The decisive factor came after Loganair strengthened its contingency offer, reducing the potential gap in services to 48 hours.
Ministers concluded that further taxpayer investment “could not be justified” given the mounting financial risk and the now-credible alternative available through Loganair’s rapid replacement plan.
Government’s final judgement
Ultimately, Ministers determined that:
- Public ownership of Blue Islands posed “substantial cost and risk”.
- The transitional acquisition proposal from Loganair required high upfront expenditure, with only a long-term and uncertain route to recoup the Covid debt.
- Business continuity via Loganair offered a more resilient and financially sustainable solution, without further immediate burden on taxpayers.
In reaching a decision, Ministers stressed that Loganair provided a more resilient and sustainable partner and noted that it offers scale, better punctuality performance, a consumer guarantee, and a four-hour aircraft replacement commitment.