CONDOR’S chief executive has rubbished “malicious rumours” that the firm was going into administration and vowed it would be serving the islands “for the long-term”.
In an exclusive interview with the JEP, John Napton admitted that business had been “tough” and that the operator had been “squeezed” by rocketing costs and a drop in projected passenger numbers partly caused by the washout summer.
But he stressed that the firm was continuing to talk to Jersey and Guernsey over a new long-term operating agreement – and revealed that he was open to discussions about the governments part-owning the firm to provide greater security and stability in the future.
Addressing the speculation over Condor’s financial status, which mounted at the end of last week, Mr Napton said: “I don’t know where that rumour came from. It was strange because we got calls from three or four media outlets within the hour saying ‘this is what we are hearing’ but nothing has substantiated that at all.
“We had been talking to stakeholders about some difficult trading, but it was normal business stuff and there has definitely not been conversations about administration.
“Somebody was trying to create a story that was not there – we are not in administration and we are not going into administration.
“We are here, we will be here both in the short-term and the long-term and I am disappointed that a number of individuals have decided to put around what I would call malicious rumours.”
Outlining the difficulties faced by Condor during the last three years, Mr Napton described how the firm had been contending with a litany of soaring costs coupled with an unexpected hit in passenger revenues this summer.
“Business is tough out there at the moment – and not just for us. Covid stripped the fat off the bones of every company, and after that we had the Ukraine crisis and fuel prices went up in June or July of that year when we had already sold 70% to 80% of our tickets for the summer so we couldn’t recoup that – so that was another hit.
“And obviously most companies are experiencing the increased cost of debt. So there is a whole host of difficult trading patterns.”
He added: “The freight business has gone really, really well, but we had a particularly disappointing summer, passenger-wise.
“The last good year for most of us was 2019, and by April this year we were about 30% ahead [in passenger bookings] of where we were in 2019. And then we headed into July and we had the first storm and then another in the first week of August and that dried up all of the late bookings you would normally get.
“It was an industry problem – people didn’t want to travel or they went further afield. Also, this winter we had some long dry docks, such as with Liberation. So with that background things got a bit squeezed, but we are still in high single digits up [on 2019].”
Just a week before the firm was forced to deny rumours about its financial situation, it faced fierce criticism from a number of businesses after announcing a near 19% hike in freight costs.
At the time, Mr Napton said Condor had faced significant price increases of its own and could no longer afford to absorb costs.
Speaking to the JEP, he said that the rise in the cost of living had been “crazy” and that Condor had also faced many above-inflation cost increases in recent years. “For example, if you look at rises in the minimum wage or living wage, depending on which jurisdiction you are in, that is something like 15% to 20% above inflation over the last three or four years, so that impacts all businesses that are staffing at that level.
“There have been increases in fuel costs too and in many other areas. The cost base for most companies is at least marginally, or in some cases significantly, above the underlying inflation, which is already high. We have absorbed costs over last two or three years but we can’t go on doing that.
“But if I can explain that 19% because it sounds like an extortionate figure. Inflation is different in the jurisdictions but in Jersey it is 10.1%, I think. We are passing on 10% above a blended inflation of 8.7%. Of that 10%, that is only being passed on to our freight logistics companies, of which we represent 30% to 40% of their cost base. So therefore it’s not 10% that will actually be felt through the chain, it will be 3% to 4% above the 8.7%, which takes us to about 12%, so is therefore is only a 2% increase per se.
“Obviously, any increase above inflation is not wanted by the industry, but we can’t continue to absorb our own cost increases so it has to be passed on.”
Against a backdrop of rising costs and unpredictable passenger bookings, Condor is continuing to talk to the Jersey and Guernsey governments over establishing a new long-term operating agreement.
Currently, the firm has an operating agreement with Jersey, but only a memorandum of understanding with Guernsey, to provide a ferry service until 2025.
Condor has long hoped for a tripartite agreement, and Mr Napton has signalled his desire for the governments to have a closer relationship with the firm.
Its relationship with Guernsey’s States has already been strengthened after the Sarnian government part-funded the purchase of the Condor Islander passenger and freight ship earlier this year.
“Why not have grown up tripartite conversations about what the service looks like, what gives the islands security, what gives us security in the long-term?” he said. “We also need to look at things like future ships and future fuels. And by having a joined-up strategic view, it’s far better. Whether that is partnership, part-ownership, support, all of those things can be discussed.”
He stressed that Condor was not currently looking to sell any part of the business and he had not been involved in any discussions about part-ownership – but he was “not against having those conversations”.
Mr Napton added: “The business would work arguably better with closer involvement and ties, but it has operated completely independently for some time so that works as well.”
Asked specifically whether he would be open to conversations about joint ownership of vessels or joint ownership of Condor as a business, he replied: “All things are going to be on the table. I think it is healthy to have each of those conversations in parallel and see what the best solutions look like.”
