Local Councils should sell Newcastle Airport stake to save jobs and services
Conservative councillors in Northumberland and Newcastle have said the time has come for the North East’s 7 local authorities get out of the airport business and offload their shares. They could then avoid cuts to council services and jobs. The councils between them, including Northumberland and Newcastle, own a 51% stake in Newcastle airport, but have also had to spend £68m to help refinance its debts. In exchange the authorities receive on average just £500,000 a year in dividends, as well as a say over bigger airport issues. The ownership of the airport has been particularly controversial after a former airport chief executive to walk away with a multi-million £ bonus. At the hearing, which the airport lost but is trying to appeal against, a judge made repeated references to the councils’ lack of experience in running an airport.
Newcastle airport is owned by seven local authorities (51%) and AMP (49%). The seven local authorities are: Durham County Council, Gateshead MBC, City of Newcastle, North Tyneside MBC, Northumberland County Council, South Tyneside MBC and City of Sunderland
Councils should sell Newcastle Airport stake to save jobs and services
5.12.2012 (The Journal)
SCATHING cuts to council services and jobs could be avoided if city leaders sell off their stake in Newcastle Airport, it was claimed today.
Conservative councillors have said the time has come for the North East’s seven local authorities get out of the airport business and offload their shares.
The councils between them, including Northumberland and Newcastle, own a 51% stake in the airport, but have also had to spend £68m to help refinance its debts.
In exchange the authorities receive on average just £500,000 a year in dividends, as well as a say over bigger airport issues.
The councils’ stake in the airport has come under greater scrutiny following a high-profile court case over the legal advice which allowed a controversial former airport chief executive to walk away with a multi-million pound bonus.
At the hearing, which the airport lost but is trying to appeal against, a judge made repeated references to the councils’ lack of experience in running an airport.
Now Conservatives in Sunderland have said enough is enough and called for a sale.
Conservative group leader Robert Oliver said: “In 2007, Leeds-Bradford Airport was sold to Bridgepoint, a private operator, for £145m but the Yorkshire councils retained a special share in the airport, to protect its name and continued operation as an air transport gateway for the Yorkshire region.
“Likewise, Newcastle Airport should be run by real executives, expert in the airport sector, not secretive councillors who have little knowledge of the industry and who do not report back to their respective councils.
“Additionally, there are grave concerns about the wisdom of borrowing large amounts of money which could ultimately come back to the taxpayer to support the airport at a time when local authorities are facing financial challenges.
“North Tyneside has already declined to be part of the refinancing, as it does not believe it is a local priority and now other local authorities in the North East should follow. A sale of the local authority shares could also net councils a huge windfall at a time when they are under financial pressure as well as freeing up borrowing for more local projects such as city centre regeneration.”
A spokesman from South Tyneside Council, which leads the seven councils dealings over the airport, said the partnership of civic leaders continued to underpin a strong business. He added: “We have recently overseen a successful refinancing process that has enabled us to significantly reduce the level of external debt in the business, which has also reduced interest payments.
“As part of the process, six of the local authorities (South Tyneside, Newcastle, Sunderland, Gateshead, Northumberland and Durham) have made a loan to the airport. The loan is repayable.”
Earlier news about Newcastle Airport
AMP to take 49% stake in Newcastle Airport
27.10.2012 (FT) AMP Capital, a global investment manager with holdings in Melbourne and Launceston airports in Australia, is to buy a 49% stake in Newcastle International Airport. AMP had been up against 3i, the UK-listed private equity group, and French infrastructure investor Antin, but is understood to be paying in the region of £150m, including £65m to pay down the airport’s £298m net debt. Another £68m has been injected by LA7, a consortium of 7 local authorities that hold 51% of the airport, the UK’s 11th biggest. The minority stake was held by Copenhagen Airports, which paid £195m for it in 2001. One aviation specialist said the prospects for growth at Newcastle airport were checked by a relatively low-income catchment area. Click here to view full story ….
Newcastle Airport loses bonus battle with Eversheds
2.10.2012 NEWCASTLE Airport has lost its battle with a city law firm over multi-million-pound bonuses. The airport had claimed Eversheds Solicitors had failed to prevent two executive directors taking higher-than expected bonuses. A spokeswoman for Eversheds said: ““The judgment clearly states that Eversheds acted in good faith on the basis of instructions which it was entitled to accept. Furthermore it adds that the real reason Newcastle Airport suffered loss was because its non-executive directors failed to carry out their obligations to the company.“ Newcastle Airport International Ltd are suing Eversheds over bonuses awarded to former chief executive John Parkin and his then finance chief Lars Friis for securing a £377m mortgage deal linked to a re-financing package with the Bank of Scotland. Initially Mr Parkin was paid £6m and Mr Friis £2.5m, but the pay-outs were reduced later in an out-of-court settlement. At the heart of the dispute are the two contracts that underpinned the deal, which resulted in the duo receiving bonuses totalling 3% of £162m. Article …
Debt fears by North Tyneside Council mean no loan for Newcastle Airport
July 21, 2012 North Tyneside Council have opted not to follow the region’s other local authorities in making a loan to Newcastle Airport, which is the North East’s biggest airport. The airport needs to refinance its near £300m debt. Seven local authorities in the North East own 51% of the shares in the airport and 3 of them have agreed the size of their contributions. But North Tyneside has said it is not willing to incur additional debt at a time when local authorities are being asked to make huge budget cuts. The other 6 will have to make higher contributions and hope they will get higher pay-outs in due course, if the airport gets back into being profitable. The other 49% is owned by Copenhagen Airports, which is looking to sell its stake. Annual passenger numbers using Newcastle Airport in 2011 were 4.3 million, compared to 5.6 million at their peak in 2007. Click here to view full story…
Firms reap rewards from Newcastle to Dubai air link
Newcastle Airport: Private firm to sell 49% stake
May 31, 2012 Copenhagen Airports is selling off its 49% stake in Newcastle Airport, but the seven local councils (LA7) which own the rest say their share is not for sale. These are Durham County, Gateshead, Newcastle, Northumberland, North Tyneside, South Tyneside and Sunderland Councils . Copenhagen’s Australian backers are pulling out of foreign airports and Newcastle is the last one it has a share in. They have owned part of it for 11 years. The leader of the LA7 group said “The airport is a major asset for the region, employing 3,000 people, and generating hundreds of millions of pounds for the North East every year.” The airport has started trying to refinancing it debts. It has until December 2013 to repay a £320m loan taken out in 2006. It had 4.3 million passengers in 2011 compared to 5.6 million in 2007. Click here to view full story…