Bermuda Aviation Services Ltd. (BAS) boosted its profits by 27 percent to $3 million for the fiscal year ended March 31, 2009 despite tough trading conditions and an expensive court battle against Government.

The company's net income rose to $3.01 million during that period compared to $2.38 million for the same time last year, in addition to an operating income increasing by 16 percent to $3.6 million and a dividend payout ratio of more than 57 percent of earnings.

Ken Joaquin, group president and CEO of BAS, said in the company's annual report that he was pleased that the Bermuda Supreme Court ruled comprehensively in favour of BAS's exclusive rights to operate a private jet facility at LF Wade International Airport until 2014 and awarded the company costs and damages in a case first brought against Government more than two years ago.

BAS had spent more than $200,000 defending itself in court and may have to incur further costs to enforce the decision.

BAS and its subsidiary Aircraft Services originally filed a writ against Premier Ewart Brown, in his capacity as Minister of Transport, as well as Attorney General at the time, Phil Perinchief, in June 2007, with the case eventually going to arbitration almost a year-and-a-half later, the court ruled in BAS's favour in December 2008.

The case centred around competitor Sovereign Flight Support being given permission by Government to offer a rival private jet service, which contravened BAS's exclusivity deal, extended six years ago, said Mr. Joaquin.

Having lost at arbitration, Government sought leave to appeal the decision in December last year, but it was refused at Supreme Court on January 8 and a subsequent appeal was turned down at the Court of Appeal in March, in a case which could prove costly to taxpayers and have big repercussions for the future of Sovereign.

Mr. Joaquin now expects Government to adhere to the terms of the ruling and honour the agreement which it had signed allowing BAS exclusive rights to provide private jet services at the airport, which would mean Sovereign ceasing operations.

"It is our expectation that Government will abide by the ruling which has been supported by the courts and take steps to ensure that BAS's right as the sole and exclusive service provider is protected," he said.

"With this matter now resolved, we look forward to working closely with the Department of Airport Operations with whom we have always maintained a positive relationship."

In his management report, Mr. Joaquin said the hardest hit part of the business was Aircraft Services Bermuda Ltd. (ASB) as a result of a marked drop in air travel in both commercial and private jet traffic to Bermuda, the main drivers of the company's revenue.

Despite efforts to reduce costs and containment to mitigate the loss of $1.6 million in revenue, he said that the collapse of Zoom Airlines caused ASB to write-off more than $220,000, while a dispute with HM Customs over historical landing fees that stretch back more than five years also impacted the company's bottom line with one-time costs in excess of $400,000 in payments to Customs for uncollected fees and incurred costs for an accounting system upgrade at CCS Ltd. having to be paid out.

But he added that notwithstanding this year's performance, management believes ASB's future outlook is sound, with an expectation of moderate and steady returns on investment.

"To every dark cloud there is a silver lining," he said. "Whilst economic hardship has played a hand in the underperformance of ASB Ltd. we have seen BAS-Serco Ltd., Otis Bermuda Ltd. and Weir Enterprises Ltd. thrive in this climate."

In his letter to shareholders, BAS chairman Michael Darling said that as the year progressed, in particular the latter half, revenues in the company slowed significantly due to the economic downturn, but despite this and other challenges, BAS again proved its ability to operate and compete effectively in a difficult environment, in addition to dealing with costs incurred by the company's case against Government.

"The company has expended more than $200,000 defending its case against the Bermuda Government regarding its right of exclusivity pertaining to the operation of its private jet facility," he said.

"We are relieved that this protracted ordeal has been settled in our favour with the arbitration panel ruling that we do have a lease until 2014 and that we have the right to operate exclusively until that time.

"Damages were awarded in our favour and we will also be able to recoup a large portion of our expenditure on legal costs. There may, however, have to be further expenditure on legal services as we go forward to enforce the awards of the arbitrators and the orders of the Bermuda Supreme Court."