The Government will be submitting a claim to Blue Islands’ liquidators and expects that the bulk of “recent funds” given to the airline prior to its collapse can be reclaimed, according to the Treasury Minister.
Giving a statement at the start of today’s States Assembly sitting, Deputy Elaine Millar spoke about the financial support provided to Blue Islands and the circumstances surrounding the airline’s decision to cease trading and enter liquidation earlier this month.
Loganair has stepped in alongside Aurigny to support air connectivity, with Ports of Jersey stating that the Scottish carrier is planning to establish a “permanent operating base on the island”.
Deputy Millar had previously confirmed that Blue Islands owes the Government of Jersey £9.1 million – including £7m of an £8.5m loan given during the pandemic and £400,000 of interest on that loan, as well as more recent financial support of £1.2m and £500,000 provided in September and November respectively.
Had we not provided support when we did, the disruption to the public in the busy summer and early autumn months would have been far greater than the comparatively small amount of disruption that we have experienced
treasury minister elaine millar
The Treasury Minister told States Members this morning that: “Government financial support for Blue Islands has been twofold.
“First, during Covid, to keep essential lifeline air links open, and second, to support them more recently, while they sought to find a new shareholder through a sales process or to find an alternative long-term solution for their viability.
“It is, of course, not the role of government to sustain a private business which may be facing financial difficulties.
“It is, however, the job of government to ensure that essential air connectivity is maintained, and that has been at the forefront of our mind throughout this time.
“The social and economic impacts, including on transport for people needing medical treatment in England, have been considered carefully in reaching every decision.”
Deputy Millar explained that, in June, Blue Islands approached Government “as a key stakeholder regarding options for future ownership” and that since then, “Government and Ports of Jersey have been assessing and negotiating those options”.
She described the proposal from Loganair as “the most compelling”, with the Scottish carrier representing “the lowest cost and best route to securing the island’s regional air links” if Ministers chose to transition to a single alternative airline.
“This was due to its scale, operational resilience, opportunities for future expansion, financial sustainability and commitments to provide both consumer guarantees and a replacement aircraft within four hours of any technical delay,” she explained.
But Deputy Millar stressed that, without financial support during this period, it was “apparent” that Blue Islands could have collapsed earlier in the summer “when there were no effective contingency arrangements in place”.
“This would not have been acceptable,” she continued.
“Throughout the process, the government has been clear that it was essential to avoid any sustained period where Jersey would be without regional air connectivity, upon which Islanders and our visitor economy rely.
“Funding of £1.2 million and then a further 0.5 million were therefore provided to Blue Islands to avert this outcome, while a long-term outcome could be confirmed.
“This was prudent and sensible planning and financial management.
“Had we not provided support when we did, the disruption to the public in the busy summer and early autumn months would have been far greater than the comparatively small amount of disruption that we have experienced.”
Deputy Millar also noted that the government “is a secured creditor of Blue Islands”.
“As such, we will expect that the majority of the recent funds will be able to be reclaimed, and we will submit a claim to the liquidators in due course.”
I cannot put a price on people getting to hospital for medical treatment
treasury minister elaine millar
And, following questions from Members around the decision to continue financial support for the airline in the months before it ceased trading, Deputy Millar contended that: “I very much doubt that anybody in this Assembly presented with information I was presented with would have taken a different decision”.
The Treasury Minister added: “Because the implication of not providing funding was that Blue Islands would have ceased trading in June or July, right before the summer period, with no contingency whatsoever for medical flights, which would have meant passengers needing emergency treatment having to fly to Gatwick and get busses and taxis to get to Southampton to the hospital.
“I cannot put a price on people getting to hospital for medical treatment.”