Re Aurigny's announcement that it wants its owner, the Guernsey Government, to underwrite £19,000,000 worth of commercial loan so that it can buy more aircraft.
Channel News:-
Aurigny want Guernsey's States to act as guarantors on a loan of nearly 19 million pounds so it can buy new planes.
The company says it needs the two ATR 72-500s to replace older leased aircraft.
Aurigny was bought by the States in 2003.
It isn't asking taxpayers to stump up the money, but will instead borrow in the private sector.
If the money is borrowed commercially, but guaranteed by the Government, the lender has no risk whatsoever, while Guernsey States has ALL the risk. So it has to make provisions for this future possible/probable liability, and that ties up the taxpayers cash which cannot, under normal accounting rules, be used elsewhere. It must be kept in reserve, and if not Guernsey States may well be facing bankruptcy, in accounting terms.
So that's £19m worth of public service priorities taking second place to a very high-risk investment indeed. And if Aurigny gets into trouble, that's up to £19m, plus all the other money sunk into Aurigny (£10m+?), flushed down the pan. About £500 per taxpayer in Guernsey, I suspect, perhaps a lot more, and I'm one of them.
It's pure spin, worthy of Gordon Brown who does exactly the same with PFI schemes, to pretend that a guarantee by a Government is not using taxpayers money, by putting it at risk.
Let's hope that people in Guernsey are not taken in by this piece of b******t.
And then there is the little matter of fair competition; how can anyone compete with an airline that's funded in this way from the public purse. The loan will be much cheaper than on a commercial basis, precisely because there is no risk to the lender, while the risk is carried by taxpayers at no cost to Aurigny.