Aircraft, passenger and cargo handling firm, Bermuda Aviation Services Ltd.

(BAS) have declared net income of $896,106 for the six months to September 30 in an unaudited statement.

It is marginally lower (-2.6 percent) than profits declared for the comparative period last year.

The company said yesterday that they did not apply for the restaurant concession at the airport, that has been rumoured was going to proposed McDonald's operator, Grape Bay Ltd., because BAS felt the restrictions in the reference for proposals laid down by the Department of Air Operations (DAO) were too onerous.

President and CEO, E. Eugene Bean, said, "The restaurants were being moved to a completely new space. The equipment that we had purposefully made for that space would not fit into the new space. One of the requirements was that the equipment that you put in the new area had to be new. We just didn't think that it was in our best interest, because we didn't think that there was anything really wrong with the equipment that we had.

"It is no secret that our restaurant had few years of success. We haven't ended up with a penny to our bottom line from the restaurant operations for eight or ten years.

"We felt that we had put quite a few hundred thousand dollars worth of equipment down there over the last ten years and to just throw that out and start from scratch, we didn't think that was in the best interest of our company.

"We have another year on the lease and so we had the ability to stay there longer, and we were somewhat surprised that the whole thing is to take place as fast as it is. I would have liked a little more notice.'' Another problem with the requirements was a negotiable gross percentage cut that would be taken by the DAO. The previous cut was ten percent of the gross and bidding for the contract would be expected to lead to a gross cut in excess of that.

The problem is that with a half-year tourism season, and air operations concentrated over a three or four hour day, a restaurant operator still has to pay wages and other overhead, with limited market penetration, after the DAO is paid.

And attracting non-travel business from the Hamilton Parish and St. George's areas has always been difficult because of pay parking at the airport, which is also limited.

Meanwhile, in a letter to shareholders, Mr. Bean noted overall: "Income for the period is consistent with earnings for this period in our operation, that being the summer months when tourism and flight activity is at its peak.'' Earnings were affected by redundancy payments totaling $88,007 relating to the closing of the restaurants in the passenger terminal which took effect on October 31, with the loss of six to eight jobs.

The restaurant closures also meant accelerated depreciation costs of $93,840 for restaurant equipment. BAS is operating just a small coffee stand at the airport at present.

But Mr. Bean is still upbeat about prospects for the company and a share repurchase policy is being continued, with $42,397 worth of shares acquired for cancellation during the six month period.

He said, "We still feel that our shares are a bargain.'' Mr. Bean also noted that food sales from the catering facility in the second half of the year will be lower than in 1995 because of USAir's reduced winter schedule this year and their decision to fully cater only one of two flights.

Smaller aircraft use by Air Canada and American Airlines, compared to last winter, will also affect sales, leading to a company projection of lower earnings for the fiscal year, ending March 31.