Eugene Bean, group president of Bermuda Aviation Services, has defended his company's loss of earnings over the first half of this year.

Mr. Bean also attributed a fall in net income to the outgoings on the acquisition of CCS Limited and a drop in freight and package handling by ASB and IBC.

He said: "Despite a drop in earnings, we consider the performance for the first six months acceptable. Operating earnings for the period fell 3.5 percent or $8,000 to $2.2 million as higher cost of goods and operating expenses bit into our profits.

"Net income for the period was off 16 percent to $2 million. Some erosion was expected as we incurred interest expense on the procurement of CCS, and added resources to support our growth. Results were further impacted as we experienced a decline in freight and package handling in ASB and IBC, and significant increases in labour across the group. With additional contribution from CCS and Otis Bermuda, revenues were ahead 52 percent.

"Income from operations in ASB showed little change from last year despite a rise in total revenue of five percent. BAS-Serco experienced a decline in earnings for the period as major projects in one of their contracts came to a close and the impact of the loss of Fire Fighting Unit was felt.

Mr. Bean said that while BAS' ZipX products remained robust, IBC continued to feel the pressure of increased cost in the carriage, and a drop in package delivery volumes.

"Weir Enterprise Ltd. had an excellent six months despite an increase in the costs of goods which are mainly GB pound denominated," he continued.

"These increases were offset by higher sales volumes. Management is extremely pleased with the performance of Otis and CCS.

"In early October, after an unsolicited bid, BAS sold off Crow Lane Bakery, divesting itself of the sole remaining food entity. Whilst Crow Lane Ltd. continued to perform well, it was felt by management and the board that our efforts would be better served if we could concentrate on our service companies which are more synergistic. The company is expected to take a write down of more than $500,000 as a result in the latter half of this year. Whilst we expect the results of the second half of this year to be positive, they are unlikely to meet those of fiscal 2007."