Minister: Hopes of recouping up to £3m of Blue Islands' debt

Jersey's Economic Development Minister says he thinks the government can recoup between £1 million and £3 million following the collapse of Blue Islands.

The failed airline owed almost £12.5 million in unpaid loans and landing fees.

£9.1m of the debt is to government for outstanding repaying on a loan given to Blue Islands during the Covid pandemic, and a further £1.7 million handed out since September to prop up the business, which is now in liquidation.

Taking questions in a Channel 103 news special programme earlier, Deputy Kirsten Morel said government will be 'high up' in the line of creditors, because of the security it had in the form of shares in the company.

"We believe there could be between one and three million pounds that we are able to get back from that.  Until the liquidators finish their work we won't know how much the government may or may not get back.

The true cost to the public purse is likely to be much greater, with the potential of unpaid taxes and social security contributions along with the financial support offered to the scores of staff who have been made redundant.

The Treasury Minister is expected to make a statement in the States Assembly next week.

Over the course of an hour, Deputy Morel answered questions that have been posed by listeners since Blue Islands ceased trading on 14 November.

Though the collapse took passengers by surprise, it has since emerged that Jersey's government had known since last end of last year of the financial troubles and that Blue Islands had been looking for a buyer.

"It was early in the summer that we understood that the sale process had failed and therefore that there was going to be some other intervention needed.

"If in July we had said 'don't book tickets because Blue Islands has got some problems', immediately in July Blue Islands would have collapsed, in the middle of the tourist season.

Deputy Morel says contingency plans had to be put in place.

"If we had not provided the £1.2m in the summer, you would have had a collapse of Blue Islands in the middle of July and it would have had a massive impact on the tourist season and a massive impact on islanders travelling for their holidays.  Many, many more people would have been affected."

The minister has dismissed any prospect of an inquiry, saying he does not see the value in it.

"The fact that we have seen other regional airlines go into liquidation at this time shows it is a wider environment that is very difficult for small regional airlines.  An inquiry?  I don't quite know what it would achieve except telling us what we know already, which is that Blue Islands had got to the point where the lack of resilience in its fleet, its thin cash flow, meant it wasn't a viable trading option going forward."

"You can spend money on an inquiry.  I genuinely don't know what it would achieve."

Deputy Morel says the individual routes operated by Blue Islands are profitable, but its lack of resilience was its downfall - compounded by technical problems with two of its five aircraft in the summer.

He says having Loganair, the UK's largest regional airline with a fleet of 38 aircraft, come in will mean much greater resilience for Jersey's air links.

Loganair is operating Jersey to Southampton, Exeter and Bristol and is expected to eventually take on the majority of the routes previously run by Blue Islands.

It is also currently serving Guernsey, along with Aurigny, but will need to apply for a licence from Guernsey's government to continue after mid-January.

Deputy Morel says it would be a 'shame' if permission is not granted because Channel Islanders would miss out on the shuttle-bus style service Loganair intends to operate using smaller Twin Otter aircraft.

"We believe Loganair can work with Aurigny, and I hope that Guernsey's statement that it wants to licence that route now is really just a way of encouraging Loganair to come to an agreement so they can serve it together."

Listen to the whole programme here.