Blue Islands in liquidation with £9m States debt

Blue Islands owes Jersey's government £9.1m

Airline Blue Islands has entered liquidation owing Jersey's government £9.1m - including £500,000 lent a week before it ceased trading - the Minister for Treasury and Resources says.

Elaine Millar confirmed ministers were aware before Friday's announcement that the company was facing financial difficulties, but after "considerable thought" they chose not to invest more public money into it.

In a statement, the government also said Blue Islands had been searching for a buyer for a year, but had been unable to find one without further significant taxpayer funding.

Ministers have also agreed to pay Scottish airline Loganair up to £1.5m to accelerate full entry into the Jersey market, it added.

Debt breakdown

• Covid-19 pandemic loan balance owed: £7m

• Covid-19 pandemic loan interest owed: £0.4m

• Additional loan on 12 September 2025: £1.2m

• Additional loan on 7 November 2025: £0.5m

• Total outstanding government debt: £9.1m

Source: Government of Jersey

Deputy Elaine Millar said that, after two loans, ministers agreed not to provide it any further taxpayer cash

The Government of Jersey lent Blue Islands £8.5m in mid-2020 to secure "lifeline connectivity during a period of unprecedented disruption" - including transport for medical patients to Southampton.

Ministers said that the airline had since made interest and capital repayments to government of £3.2m.

But, including interest, that left £7.4m outstanding.

And it has now emerged that ministers made two additional loan payments to Blue Islands, including £1.2m on 12 September, and £500,000 on 7 November - seven days before it ceased trading.

The government said as a "secured creditor" it expected "some funds may be recoverable", although this would be subject to the liquidation process.

The two most recent payments were made as the airline tried behind the scenes to find a buyer.

In its statement, the government said it had supported this process by deferring loan repayments and providing funding to support liquidity, but that the airline had been unable to find a buyer without further significant funding being required.

Millar said discussions had taken place between government and Blue Islands about what support could be provided.

"Those discussions, and their outcomes, were not made public because doing so would have risked compromising confidence in the airline, exacerbating an already difficult situation," she said.

"Very considerable thought was given before ministers took the decision not to provide further financing, subsidy or to take ownership of Blue Islands.

"We felt this was not the best use of public funds, and that more sustainable, alternative options were available to ensure the continuation of our lifeline routes."

The statement also confirmed that the Government of Jersey had agreed to provide up to £1.5m to Loganair to ensure that the Scottish airline could begin providing services within 48 hours of Blue Islands ceasing trading.

"In so doing, we have secured the future of the Island's regional connectivity", the statement added.

"Government's contribution to Loganair recognises that they are commencing operations during a quieter period of the year and will face substantial set-up costs, far in excess of this funding, including the need to lease an additional aircraft on a more expensive short-term basis to provide capacity while their long-term operating model is put in place."