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BIH Helicopter Service & Sainsbury’s Planning Application

posted Mar 3, 2011, 1:34 PM by Richard Cliffe

True Friends is not campaigning one way or another on the proposed sale of the Penzance Heliport to Sainsburys but the future of the helicopter service is a factor (or should be) in the decisions being taken over funding the IOS Ferry Link.  The helicopter is currently the year around workhorse passenger service for the IOS. There is uncertainty whether BIH will continue with the service after completing the sale.

 BIH is selling the site to raise capital.  It has to repay “capital instruments” (mainly loans) of  £5.4 million pounds that fall due during 2011 and a further £7.9 million due over the 3 years 2012 to 2014.  The Bank of Ireland, the largest creditor,  has a legal charge over BIH’s property and this will include the Heliport. (taken from 2009 Annual Accounts from Companies House).

 Objectors to the Sainsbury’s application often cite maintaining the helicopter service as one of the reasons for objecting but the reality is that BIH will become insolvent and in all likelihood go into administration if a sale does not go ahead.    The Company needs the sale to go ahead to survive.


Planning Application

The Sainsbury’s planning application (PA10/08714)  requests  approval for “ “Redevelopment of site incorporating new retail store, petrol filling station, car parking, park and ride, business units and associated works.  Heliport Eastern Green Penzance Cornwall TR18 3AP”

 Visit http://planning.cornwall.gov.uk/online-applications/applicationDetails.do?activeTab=summary&keyVal=LELNIBFG0DJ00 for more details.

 To see the plans and associated reports and letters go to: http://planning.cornwall.gov.uk:8181/rpp/index.asp?caseref=PA10/08714

Note that online comments can be viewed at the first link by clicking on the “comments tabs”.

 Few people are keen on the sale of the Heliport but the likely consequence for BIH of not selling the site appear worse.

 

Additional Information

    The Company made a loss of £319,000 in 2009 (last set of published accounts).  The actual loss on operations was £949,000 but the Company benefited from an exception item  - a forward position to buy US dollars which yielded a one off profit £630,000.

    The Company owes so much in part because it has made big losses in bad years and only modest profits in good years.  It has had to borrow at increasingly exorbitant  rates to maintain adequate working capital.  It borrowed an additional £1 million in 2009 at 12 %  interest to be repaid in Nov 2014 with a 100% premium on repayment (an extra £1 million premium). 

    The Company has agreed to sell to Sainsbury’s but the obligation to complete the purchase only exists if Sainsbury’s gain planning permission.  If Sainsbury’s do not gain planning permission then there is no sale and BIH will not be able to honour its debt repayments (the key debt repayment date is 16 Jun 2011).  The Company would become insolvent.  What happens to BIH in this situation depends primarily on the Bank of Ireland and other creditors.  The Company would probably go into administration.  The Bank of Ireland could seek possession of the Company’s assets, including the Heliport, and find it is own buyer.  It is highly questionable that the Company would survive this process.

    Alternatively the sale to Sainsburys goes ahead, BIH pays of creditors, and it survives to fight another day.  The question is whether it decides it is worthwhile to invest in a new heliport site to maintain the link to IOS.  The 2008 directors’ reports notes that the IOS service has suffered from a downward trend in visitor numbers (no doubt due to competition from Skybus).  The Company states in the 2009 report that whilst moving its base “the service to the IOS will continue to operate”.

    BIH has since been refused the use of Lands End Airport which is owned by its competitor, the IOSSC.  There has been investigation of site near St Erth.  Whether the Company and its bankers can justify investing in new facilities at St Erth is unknown.  Given the difficulty the Company has competing against Skybus which has much lower operating costs the answer may be no despite reassurances that it plans to maintain the service.  The fact that the Bank of Ireland is in desperate financial straights does not help.  Even if they do invest in a new heliport there is the issue of replacing the ageing helicopters which are increasing difficult to maintain and unreliable in operation.

    In a nutshell sale of the Heliport allows BIH to survive but that does not necessarily guarantee the long future of the helicopter link to the IOS.  The IOS link has performed badly due to competition from Skybus and this problem will not go away.

 

Impact on IOS Ferry Link Decision.

 What the BIH situation does tell us is that plans for IOS ferry Link should assume the withdrawal of the helicopter link within the first five years of the life of the new vessel.  One can expect Skybus to expand to fill part of the gap created but Skybus is more weather dependent than the helicopter service and the replacement ferry needs to be able to “take the strain” when necessary.  The alternative is periodic chaos in travel to the IOS which over time risks limiting the tourism business upon which the Islands’ economy is dependent.

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