Local Councils asked to reject Newcastle Airport’s loan request.
The 7 North East Councils are being asked to prop up an at-risk business which mostly enables people to take holidays and visit friends and relatives. People need holidays but we think a loan for this purpose is not an investment in the economic future of the north east. We also think it is environmentally short sighted and irresponsible and that the loan request should be rejected. If Newcastle Airport is in serious difficulty, adding to its debt burden will not help, a thorough review of the Airport’s finances and purpose would be a better approach to take if it is to survive in any form.
1. Newcastle Airport losses and financial state:
Newcastle Airport has suffered huge financial losses as a result of the pandemic with revenues falling by £46 million according to its 2020 Annual Report. The Airport continues to struggle and, as reported by ITV News on 5/10/2021 (https://tinyurl.com/s2s4h4mw ), it is asking for loan facilities to support its continued functioning.
The 7 North East councils, which own 51% of the Airport, are being asked to stump up a sum we understand to be £5.1 million pounds of taxpayers money. The Airport is also asking the 49% private shareholder, AMP Capital, for a similar sum (£4.9M). Councils are already struggling to provide core statutory services with further cuts to come and potential rises in council tax. They can ill afford to risk the loss of further sums to prop up an uncertain local business, any loss could mean a further reduction in services or jobs.
This loan will have to be added to existing historic, large-scale debt for which the Airport is already struggling to make payments. The major lenders have agreed to waive repayment requirements until the end of 2021 and the Airport is trying to extend this until the end of 2022 to prevent the airport breaching the existing loan covenants - this is a measure of how bad the situation is. The new loan facility will probably be used to fund the day to day running of the airport, let alone any repayments due.
2. Due diligence and investigat