Sligo County Council reportedly in local authority deal to take over debt of Ireland West Airport.

Councillors to consider multi-million euro investment plan for airport.

‘Government rejected airport plans to create thousands of jobs in tourism and other sectors.’

‘…no funding will be made available after 2014.’

Sligo News File Online.

Sligo County Council SignMembers of Sligo County Council are expected to consider a multi-million euro bailout of Ireland West airport early this year.

Sligo is understood to be one of seven local authorities proposing to assume responsibility for debts of the airport, believed to be in the region of €9 million. 

The move was apparently discussed at a recent meeting of Mayo County Council where, according to the Mayo News, council CEO and chairperson of the airport trust, Peter Hynes informed members that the Mayo authority proposed to borrow €7.3 million to pay off “a large portion” of the €9 million debt in return for a 17.5% stake in the airport which other councils – Sligo, Donegal, Leitrim, Roscommon and Galway City and County Council – will then help Mayo to repay over a 30-year term in exchange for shares in its 17.5% stake. The remainder of the debt, €1.7 million,  will be repaid by the Western Development Commission.

Equity, the meeting reportedly heard, will be divided among each local authority based on the benefits accruing to each from the airport in terms of passenger numbers and ‘economic spin off.’

Sligo’s contribution could be upwards of two million euro.

It is thought that Sligo’s total contribution in the lifetime of the plan could be upwards of two million euro – perhaps more. A concern, however, is whether the council can afford to take on the responsibility. The authority itself already has long-term debt of €120 million, cumulative revenue debt of just under €20 million, and also has to make provision for a €10 million budget surplus in order to stabilise its finances over the next ten years. Additionally, it has to find millions of euro to meet the costs of legal proceedings following the High Court/ Supreme Court case taken against the council by owners of the Lissadell estate concerning rights of way through the estate.

Many will find it hard to understand why responsibility for debts of the airport should be dropped on councils and by extension local families or communities who likely will ultimately be left to pick up the  bill for the debts in the form of increased local council charges or service cutbacks. The airport, a private development,  is owned by a statutory trust, and run on behalf of the trust by a private limited company, Connaught Airport Development Company. It has received €21 million in “direct subvention” state aid since 1993.

Latest 2013 accounts for the Company indicate it is heavily dependent on bank borrowings. A large part of €8.9 million is payable within five years with €2.5 or so payable in 5 years or longer. The company lost €659,000 before tax in 2013, excluding taxpayer grant aid of €1,182,262. Airport users, over 12, are
charged a development fee of €10 each, a practice in place for the last twenty years.

Employee numbers in 2013 were 107, up five on 2012. Wages and salaries for 2013 were €4,061,998.

Airport would need 1.5 million users to be viable.

It has been stated that to make it viable the airport would require a throughput of 1.5 million users. Company accounts show that passenger numbers for 2013 were 665,400, 3% less than recorded in 2012.

An Oireachtas record states that, in December 2012, Airport Managing Director, Joe Gilmore told the Oireachtas Committee on Transport and Communications that the airport was funded until 2014 “under the core operational programme” and that the company had a commitment from government to that effect.

‘…facing stormy waters.’

“However, after that, the Department has advised us that there will be limited, and possibly no, funding for regional airports. Depending on the economy and so forth, we will potentially be in a treacherous position.  We are carrying €10 million of debt on our balance sheet as a result of infrastructure projects undertaken with the government over the past number of years.

“We are facing stormy waters.”

Airport Chairman, (now resigned) Liam Scollen spoke of government dismissal of plans for the growth of passenger numbers and jobs at Knock.

“For 18 months, we have met the government and presented it with plans to create thousands of jobs in tourism and other sectors. All of these plans were rejected on the basis that Ireland West Airport Knock is a private company. That is not true; we are a community trust. Our vision for the future is one of 1 million passengers per annum and the creation of 500 jobs without a grant or subvention mentality.”

‘…enormous package of incentives for Shannon.’

Referring to a government announced “…enormous package of incentives” for Shannon, he said: “We strongly disagree with the government’s approach to this issue of Shannon. From the start, we stated that the government, in proposing what it did for Shannon, should first have obeyed the recommendations of the Booz and Company report.” This stated, he said, that “no such package should be undertaken without understanding the competitive impact on Knock and other airports. What has the government done? It has gone ahead with the package, and that is extremely unfortunate. It is unfair. It is wasteful of public resources because it does not look at competitive airports, such as Knock, to come up with solutions. It is also a parochial approach…that is very divisive.”

The government package for Shannon is understood to include a decision to write off €100 million of its debt.

Deputy Michelle Mulherin, FG, asked, “what the department’s view of Knock was. The department has told us repeatedly that the minister’s clear view is that the department is engaging with the state airports and it sees Knock as a private entity – the department’s own word, not ours – and, therefore, there will be no funding for Knock after 2014, unless additional funds were made available from the Exchequer. A question was asked about funding after 2014. The default position is that no funding will be made available after 2014.”

In an interview subsequently with the Mayo News in January 2013, Mr. Scollan reportedly said “…that it had now been decided that the state airports need to be protected, regardless of if that stifles the development of regional airports, or even closes them.

“IWAK, being the biggest regional airport, is seen as the biggest threat. We have asserted to government that this policy shift in relation to Shannon Airport is hugely damaging to IWAK and potentially illegal.”
A report released in December 2013 by a group under the chair of Fine Gael TD, John O’Mahony graphically highlights the critical position surrounding the future of the airport. It states “Fundamentally, the work of the Group has shown that under the existing policy approach involving the cessation of exchequer supports for regional airports, a range of legacy financial issues will mean that the airport, despite its efforts to meet the target of being self-financing by the end of 2014, would be forced to close within the next two years.”

In a “special end of year report,” Sligo County Council Chief Executive, Ciaran Hayes has described the proposed local authority plan for the airport as “an innovative collaboration between the Northwest counties and Ireland West Airport (IWAK)…” It will be advanced subject to a Due Diligence report currently being compiled,” he said.

Knock Airport 2Shareholders/members of the “Horan International Airport Trust” are listed as:

Peter Hynes, Trustee, Chairperson, John Dillon, Trustee, Fr. Richard Gibbons, Trustee, Martin Gillen, Trustee, Joseph Kennedy (UK), Trustee, Brian McEniff, Trustee and Archbishop Michael Neary, Trustee. Secretary: Brendan Flanagan.  

Directors of the airport company listed in the 2013 annual return of the Connaught Airport Development Company Limited to the Companies Registration Office on 8 October 2014 are:

Patrick James Kennedy, Board Chairperson, Bowdon, Cheshire, England, Michael Neary, Tuam, Co. Galway, Brian McEniff, Hollyrood Hotel, Bundoran, Co. Donegal, Arthur French, Straffen, Co. Kildare, Joseph Paul Gilmore, Company Managing Director, Claremorris, Co, Mayo, Timothy Martin McDermott, Cheadle Hulme, Cheshire, England, Fergal James Broder, Sea Road, Sligo, Peter Hynes, Foxford, Co. Mayo, Martin Gillen, Deerpark East, Westport, Co. Mayo, Richard John Gibbons, The Presbytery, Knock, Co. Mayo, John Molloy, Gosforth, England, Patrick Gallagher, Breaghwy, Castlebar, Mayo and Brian O’Dwyer, Central Park West, New York, USA.