Gozo Channel faces bleak future as losses surge

“Major uncertainty on the company’s future operations” – Directors’ report

 

Gozo Channel Operations Ltd, the State monopoly that provides essential transport services between the two islands, is facing a very bleak future as it has accumulated massive losses due to mismanagement and government interference.

The Shift is informed that the company’s current financial situation is so poor that it cannot even afford to pay for the annual refit of its vessels and has made ‘secret’ arrangements with private service providers to allow it to stagger expected payments over a number of years.

The financial statement published by the company last week, which only cover the period until the end of 2018, show that although the company carried more passengers and vehicles, it still managed to register losses.

By the end of 2018, Gozo Channel made a loss of almost €150, 000, even though it received an annual government subsidy of almost €700, 000 and further ‘undisclosed’ income from the government of €2.5 million.

Details show that while in 2018 the company’s turnover increased by some €4.5 million over 2017, Gozo Channel registered losses instead of making a profit as a result of increased activity.

“This shows that after years of burdening the company with increased costs, mainly due to the employment of so many people before the 2017 election for political reasons, the company has become so expensive to run that the more business it generates the more losses it accumulates,” company sources said.

In the run up of the 2017 elections, the Labour government employed dozens of extra workers with Gozo Channel and its service providers, inflating the company’s payroll.

The Shift is informed that the current financial situation is in fact worse than the results reported for 2018.

Sources said that since then, the company’s costs have increased exponentially, particularly due to the wet lease, by direct order, of the MV Nicolaos from a Greek company to serve as the company’s fourth vessel.

As a direct result of another electoral pledge, Gozo Channel has racked up some €0.5 million of extra losses per month, for an old vessel it cannot afford and does not really need.

The fourth vessel is only necessary during ‘peak demand’, which is a few days and a few hours during summer and long weekends. The extra costs are not justified and do not fit the company’s current pricing structure, company sources added.

To make matters worse, the unexpected COVID-19 pandemic has hit the company extremely hard, with much less turnover expected this year. Industry insiders said the company will not survive without a capital injection from taxpayer funds.

In its directors’ report accompanying the 2018 financial statements, Gozo Channel refers to “events after the reporting period” and admits “experiencing an unprecedented crisis” due to the pandemic posing a major uncertainty on the company’s future operations.

Although Gozo Channel is owned by the government, subsidies need the approval of the European Commission under stringent State Aid rules.

Mismanagement is not a valid reason for Brussels to decide to give the green light to save a floundering State monopoly.

So far, the company has shied away from publishing its 2019 accounts, avoiding further speculation on its survival as a going concern.

                           
                               
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Robert Muscat
Robert Muscat
18 days ago

Part of the losses are due to inefficiencies. Why can’t tickets be purchased online? Why are tickets scanned by a second attendant as soon as purchased? Why are there at least four attendants to direct cars on boarding? It is true that crossings to Gozo in April-May reduced due to restrictions, but in Summer there was heavy crossing to Gozo.

Dave Caruana
Dave Caruana
17 days ago
Reply to  Robert Muscat

The expenses you are pointing out (double checking tickets, boarding attendants) are probably ones that actually aid the smooth operation and profitability of the line. The real money-wastage is probably not as visible!

mick
mick
18 days ago

This whole quango should be in private ownership with no subsidies, what a typical Labour mess.
Sack the lot and then get them to submit their CV’s and re-apply for their positions. The headcount will drop immediately, and the management will no longer be required. Re hires should be paid at 75% of their previous earnings, just watch the profit margin lift.

Albert Bonnici
Albert Bonnici
18 days ago

A solution could be that whoever employed people for votes should pay these people from the pocket of the ‘whoever’or else the Company needs to make these extra people redundant. This is case of over employment and a bad decision, by whom we all know, in getting the extra ferry that we don’t need.

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