Aurigny's debts to be paid off by Guernsey States

The airline has warned a rebrand could cost in excess of £750,000

The Aurigny airline's 15 years of accumulated debt are to be repaid in full by the Guernsey's government.

The company has made losses in every year but two since it was bought by the government for £5m in 2003.

The debt to be written off is £19.9m accumulated between 2003 and 2014 with a further £5.3m set aside to cover expected losses up to 2017.

The Treasury and Resources Department expects Aurigny to return to profit in 2018.

In agreeing the payment out of the island's capital reserve the States also agreed to look at setting long-term strategic objectives, including which routes are operated and the capacity and frequency of flights.

It will also look at measuring the airline's success through its social and economic contribution, rather than just its balance sheet.

The States also commissioned a report giving "serious consideration" to rebranding to a name that "clearly positions it as a Guernsey airline".

Aurigny has more than £50m of loans guaranteed by the States, to support its business and the purchase of new aircraft

Deputy Darren Duquemin was behind the move for change, which he has raised again after it was sidelined in 2013.

"It's not fit for purpose, it is a name that does not help to pay the bills, moreover it is a name that hinders.

"They spend up to £500,000 each year on off-island marketing - how much of this investment is wasted... because of the handicap of what Aurigny admits on its own website is 'not the easiest of names'."

The name is the Norman word for the Channel Island of Alderney.

The report into whether or not a rebrand should take place is due to return to the States before February 2017 with any change due to coincide with the airline's 50th anniversary on 1 March, 2018.

A spokesman for the airline said: "Aurigny is delighted that the States has agreed to recapitalise the Aurigny Group, which will help position us towards a break-even position.

"We also welcome a decision by the States to more clearly define our objectives going forward."