NEWCASTLE Airport has said it “weathered the storm very well” last year, although it is still facing heavy interest payments on its £300m debt.
The airport announced its performance for 2010 “compared favourably” with other regional airports, while its financial results have “remained comparatively strong”.
It said passenger numbers had dropped from 4.6 million to 4.4 million in 2010, while pre-tax losses increased from £4.1m to £4.8m. Its operating profit was £16.1m compared to £17.1m in 2009.
But the airport had to make £19.5m in interest payments on its debts in both 2009 and 2010. The loan behind those debts has caused controversy in recent months, with one MP calling for an inquiry into the arrangements behind it.
A spokesman for the airport said: “Considering the events of 2010 that we faced, including a lengthy period of Icelandic volcanic activity and the extreme weather problems of January and November, the results are remarkably strong. It’s also set against the background of challenging conditions in the aviation marketplace, Newcastle Airport has weathered the storm very well.”
However, the weight of the refinancing deal struck with Royal Bank of Scotland in 2006 still weighs on the company’s finances. The airport – which is 51% owned by the region’s seven councils – agreed a £377m mortgage, and The Journal has reported earlier that former chief executive John Parkin and former finance director Lars Friis had it written into their contracts that they would receive 2% and 1% of the loan amount as a bonus. Friis has since died and Parkin no longer works for the airport.
The airport reduced its debt over 2010 from £307.8m to £304.5m, but it paid approximately £19.5m to service interest on that debt in both 2009 and 2010. A further re-financing is due in 2013, and it was speculated earlier this year that both the councils and 49% shareholder Copenhagen Airports were looking to sell their stake.
However, the councils opted not to comment and Copenhagen Airports said it was “not in a formal process to sell”.
The airport added economic problems had been “compounded by successive increases in air passenger duty”, a tax which may well be raised yet again next year. The Journal has launched a campaign called A Tax Too Far to highlight the effect of air passenger duty on the region’s aviation industry and the local economy, and industry organisations and businesses have added their opposition to rises.
Staff numbers rose from 360 to 371 in the year, while it welcomed the imminent opening of a Hilton DoubleTree luxury hotel on site in the autumn as a “signal the airport is going places”.
The spokesman added: “We have ambitious plans going forward. We’re constantly working with airlines to improve frequency and new routes and there’s a possibility of announcements, and we’re also looking at further improvements to the terminal building.
“While these have been challenging times, Newcastle Airport remains one of the key regional airports and remains a robust business with a crucial role to play in the North East both now and in future.”