Regular IW Observer readers will remember our festive prediction that Red Funnel, Isle of Wight’s beleaguered ferry operator, would once again employ their favourite accounting manoeuvre – the cheekily-coined “one-day diddle” over Christmas. They did!

Again cutting their accounting period short by just one day, Red Funnel has successfully kicked any awkward financial filings down the road (for the third time in two years). Thanks to this crafty move, the 2022/23 accounts – originally due at the end of September – now don’t need to be totted up until March this year. But it is the last time they can do it. March 27 is the day of reckoning.

The £40 million elephant in the room

At the heart of Red Funnel’s woes sits a huge £40.7m debt, due to have been paid off last July. With other repayments looming on the horizon, it’s clear that Red Funnel’s finances are about as stable as a dinghy in a storm.

Hopes of saving the troubled firm seem to rest on a sale, yet is three months enough? Rumour has it that negotiations may be back to square one as, shortly before Christmas, three major expert networks – Guidepoint, GLG, and Qualis – reached out to maritime specialists for intelligence on Red Funnel and the UK ferry market. Such inquiries, insiders say, are typically made very early in any potential acquisition. It’s like getting your bearings before deciding whether to board ship – or jump overboard.

Their questions aim straight at the heart of Red Funnel’s various troubles. They want to know about the competitive landscape, the possibility of regulation, the investment needs of Red Funnel, and the implications of decarbonisation legislation on the operators’ aged fleet – which will take years to replace, even if investment is secured. Both main cross-Solent ferry operators have been lobbying government to exclude their fleets from new green levies – but no decisions have yet been made.

New deals for old ships

The length of time before any shiny new ships will sail the Solent has been highlighted by Red Funnel, signing a new five-year deal with A&P Shipyard, in Falmouth, for annual repair and refit services. The three ‘Raptor’ class ferries, Red Falcon, Red Osprey and Red Eagle, all built in the mid 1980s, and the freight-only Red Kestrel (2019) are all named in the contract.

Who’s steering the ship?

Enter Sam Ballinger of global player, FTI Consulting, who has been brought in to oversee the RTI (Restructuring, Transformation, and Insolvency) team weather the storm. His profile boasts experience in steadying the ship for struggling businesses but, interestingly, he’s also a licensed insolvency practitioner. One has to wonder if someone in the captain’s cabin is preparing for the worst-case scenario, is hedging their bets, or could it just be coincidence? Would the government step in to help keep our lifeline services afloat? Or might they think that the current owners shouldn’t have overpaid for the company in the first place – and should nobly go down with their ship? Either way this is a worrying time for Red Funnel’s staff, suppliers and customers – all of whom are being kept in the dark.

Lifeline or last voyage?

At the moment only time will tell whether the (certainly expensive) expertise from FTI will help the company, which has been afloat since 1861, avoid the rocks or simply oversee its final descent into the depths – because it will be another three months before we see any financial truths.