Debt fears mean no loan for Newcastle Airport

COUNCIL bosses in North Tyneside have opted not to follow the region’s other local authorities in making a loan to the North East’s biggest airport.

Newcastle Airport bustling with activity
Newcastle Airport bustling with activity

COUNCIL bosses in North Tyneside have opted not to follow the region’s other local authorities in making a loan to the North East’s biggest airport.

North Tyneside Council last night confirmed it would not be making a loan to Newcastle Airport, as bosses there look to refinance its near £300m debt.

Seven local authorities in the North East own just over half the shares in the airport and three 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.

North Tyneside’s decision means higher contributions from the other six councils. In return, they will get higher pay-outs from the airport.

The seven councils – the others being Northumberland, South Tyneside, Newcastle, Sunderland, Durham and Gateshead – form LA7, which owns 51% of shares in the airport. The other 49% are owned by Copenhagen Airports, which is looking to sell its stake.

The airport confirmed in May that it had begun the process of refinancing a £298m net debt and the councils are being asked for loans as part of this.

Northumberland councillors have approved a report asking them to increase their capital programme for 2012/13 “by a maximum of £17m” to facilitate their loan and Gateshead’s cabinet agreed to increase its programme for next financial year to cover a £12.6m loan. The cabinet at Sunderland has similarly agreed to increase its 2012/13 programme to allow it to contribute “a maximum of £20m”.

The exact amount of the loans will not be known until the re-financing is completed.

North Tyneside mayor Linda Arkley said: “The LA7 authorities have all agreed that there is continued support for the airport and its future growth. It was mutually agreed that the decision relating to future share options is a matter for individual authorities to consider.

“Six of the seven will be taking up the option of making further investment. After discussions with the leaders of the other shareholding authorities our position is that we will not be taking up the option that would involve additional debt for the council.”

A spokesman for LA7 said: “We have been aware of North Tyneside’s intention not to invest in the refinancing package for some time and this has been taken into consideration when establishing the maximum level of investment required from each of the remaining six authorities.

“All seven local authorities continue to be committed to the future success of the airport and are working together to ensure a successful refinancing process and to select a new partner.”

The spokesman also confirmed the six investing councils would be in line for higher dividend payments, but that North Tyneside would not.

An airport spokesman said: “The airport employs over 3,200 people and generates over £645m for the regional economy every year.

“When the economic recovery comes, the airport will provide the connectivity the North East needs in order to compete effectively.”

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