Revenues fall but Bermuda Aviation makes a profit

WEDNESDAY, DECEMBER 7: Bermuda Aviation Service managed to make a profit despite revenues falling by $5.5 million due to the economy.

The company reported $830,000 in net income in a six month unaudited report ending September 30, 2011.

BAS is the parent company for shipping firm International Bonded Couriers (IBC)/ZipX, elevator company Otis Bermuda, cabling firm CCS, automotive company Weir Enterprises, BAS-SERCO and Aircraft Services Bermuda.

Kenneth Joaquin, group president and CEO, said: “While these results are broadly attributable to Bermuda’s current economic climate, they are singularly reflective of the costs to exit from segments of Aircraft Services Bermuda Limited (ASB) operations.

“Net income before discontinued operations and income from operations were both in excess of $1 million.

“The pressures of the local economy have been and continue to be an unavoidable reality as we have seen revenues contract by over $5.5 million over the prior year.

“The sale of goods has been particularly affected by a recessionary market that has seen consumers with much smaller appetites for new or major capital projects.

“This was neither surprising nor unanticipated. “

The CEO added that BAS bolstered its cash position

Having previously stated our intention to bolster “in order to allow for more flexibility in what we saw to be challenging times ahead, we have eliminated outstanding debt and have improved the cash position by over $2.1 million from the prior year.

“The additional liquidity will provide the company with the ability to execute some key strategic objectives that will better position us for the future.”

The company discontinued operations of the major segments of ASB through an asset sale to Renaissance Aviation Ltd.

“While the transaction proved to be cash neutral for ASB in so far as the context of the proceeds of the sale and associated restructuring costs cancelled each other out, the accounting implications of the transaction had a negative impact on the current period’s earnings.

“Notwithstanding, management remains firm in its conviction, that after having considered the commercial aviation industry and the future direction of BAS, this was the correct course of action.

Mr Joaquin added that with a “depressed economy” and an “increasingly competitive facilities maintenance market” they have limited expectations for the second half of the financial year.

Net income for the automotive section of BAS showed $475,000 in net income from operations in the first six months.

Mr Joaquin said: “Weir Enterprise Ltd. has continued its good form into the first half of this year. This is a trend that we expect to continue for the remainder of the fiscal year.

“Otis Bermuda Ltd., with its strong maintenance portfolio, has met management’s expectations for the period. With new work in the pipeline, the Company is expected to continue to perform to plan.

“IBC Ltd. had an acceptable six-month performance and remains a solid investment for BAS still providing a good return.

However, due to its retail like nature, its performance will always reflect the state of the broader local economy.”

Net income from cargo services was down $260,000 to $170,000 for the six months.

IT services had a spike in net income as it rose from $449,000 to $632,000.

Mr Joaquin added: “CCS Group Ltd., despite a tough market, has performed well and met Management’s expectations.

“With the recent appointment of a new general manager and an anticipated revitalized look at its product and service offerings, CCS will look to capitalize on the changing landscape of the information technology industry.”

The BAS CEO said the rest of 2011 and 2012 does not forecast to be much better for Bermuda.

“The next half of the year will be equally challenging, if not more so, for the local economy.”