Bermuda AviationServices Ltd. (BAS)posted record revenues of $56 million - but saw its profits fall for the first time in five years, according to the 2008 Chairman's Report.The company's performance this year was "significantly" impacted by a one-time charge of $697,000 relating to the sale of Crow Lane Bakery, an executive restructuring cost in excess of $200,000, and the ongoing cost of litigation for a long-running case against Government over exclusive rights to operate its private jet terminal.

BAS took Government to court back in June 2007, filing a writ against Premier Ewart Brown in his capacity as Minister of Transport, and former Attorney General Phil Perinchief, over what it claims is a breach of its exclusive rights to provide private jet services at LF Wade International Airport.

The company argued that despite its exclusivity deal running until 2014, new competitor Sovereign Flight Support had been given permission to offer a rival private jet service by Government, but now an end is finally in sight after a date was set for a decision by arbitration next month.Operating income for 2008 of $3.1 million was slightly ahead of last year, on expenses that rose 27 percent to $30 million. Meanwhile net earnings of $2.4 million were off 30 percent.

Integration of the company's two recent acquisitions were nearing completion, according to the report, with Otis Bermuda Ltd. performing to plan. But CCS Ltd., while making big strides in increasing market share in a very competitive market, and contributing well to BAS's top line, fell short of the company's expected returns on revenues and senior management has identified the steps needed to resolve this shortfall and expect next year to be more successful.

Earnings in ASB were also lower as aircraft handlings declined. Other uncontrollable factors were higher fuel prices, which had a direct effect on the importation of goods and packages, the cost of delivery and the operation of fleet of service vehicles.BAS was also hit with higher foreign exchange rates for goods imported from Europe, Canada and the UK, and income from operations of $3.4 million, while slightly ahead of last year, was "disappointing", said the company, considering the 68-percent rise in revenue.

The report read: "It is fully expected that the next year will be challenging. However with the information before us, the forecast for the next fiscal year is far brighter."We will of course continue to closely monitor and evaluate our portfolio of operating companies to determine how well we are positioned for growth and performance, and to determine where our next opportunity might be.

The first two months of fiscal 2009 have already shown great improvement."The company's shares traded in a very narrow range over the past year, with the high being $6.50, but the board believes that even now the share price is undervalued and have implemented buy-back programme to realise their value.