Newcastle Airport requests financial support from North East taxpayers
Report by Tom Barton
Newcastle International Airport has requested a loan facility from its shareholders, including local taxpayers, after suffering a dramatic decline in revenue during the pandemic, ITV News Tyne Tees can reveal.
The seven local authorities in the region collectively own 51% of the airport, meaning council taxpayers are being asked to provide financial support to the region's largest transport hub.
The authorities include Newcastle, Sunderland, Gateshead, North Tyneside, South Tyneside, Northumberland and Durham.
Leaders from the seven councils are due to meet later this month to discuss the request.
Known as the Local Authority 7 (LA7) shareholders, they have already said they will do everything they can to help the airport "bounce back from the effects of Covid".
The airport is also asking its other shareholder - AMP Capital, which holds a 49% share - to provide a similar loan.
It is doing so as it attempts to negotiate a waiver of its covenants with major lenders until the end of next year.
"Our current covenant waiver is in place until the end of 2021 and we are well progressed with discussions to agree a further period of waiver until the end of 2022," an airport spokesperson said.
Covid-19 has had a detrimental impact on the aviation industry. Published a few days ago, Newcastle Airport's 2020 annual report showed revenues fell by £46m from 2019.
And travel expert Simon Calder says regional airports like Newcastle have suffered disproportionately from Covid-19 travel restrictions.
The North East England Chamber of Commerce has urged the local authorities to accept the loan request.
“The airport is a hugely important part of all of our economic infrastructure, and it's only right that they take sensible precautions given what they and the industry have been through to ensure the long term success, the long term viability," said the chamber's policy director Jonathan Walker.
In a statement, the LA7 echoed the Chamber's comments on the importance of the airport to the region and referred to the loan request as a "measured response to show support from all shareholders for the airport to its funders and this would only be called on in the unlikely event of its financial position falling below a certain level...
"Newcastle International Airport is one of the North East’s most important economic drivers and will play an ongoing crucial role in our region’s recovery from the Covid-19 pandemic," they continued
Shareholders remain fully supportive of the airport and we will do whatever we can to help it – and the wider region it serves – bounce back from the effects of Covid.
In a statement provided to ITV Tyne Tees, the airport also offered an assessment of its financial situation.
Read in full below:
"Over the last 18 months, COVID-19 has had a significant impact on the aviation industry. Last year we saw the majority of aircraft grounded for many months, which resulted in a large reduction in our passenger numbers and revenue into the business. Despite a very difficult year, Newcastle International Airport remains a strong asset to the region and a financially robust business.
"During 2021 we have seen international travel slowly resume, with passengers numbers increasing month by month.
"We are very pleased that the Government has announced plans to reduce the testing requirements for those returning to the UK as of the 4th October and simplify the traffic light system. We are confident that these streamlined arrangements will ensure that the positive recovery that we have seen so far will continue.
"In October we will see the return of Emirates operating four flights a week to Dubai and Eurowings operating twice-weekly flights to Dusseldorf.
"Looking forward to 2022, our airline partners are confident that the demand for travel from the North East travelling public will be strong. We will be welcoming additional based aircraft from Jet2.com and TUI, together with a new Ryanair base, which will provide even more capacity to popular destinations as well as the introduction of a number of brand new routes for the region."