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BIRMINGHAM AIRPORT FEARS: Emergency loan of up to £18.5m agreed

BIRMINGHAM AIRPORT FEARS: Emergency loan of up to £18.5m agreed

Image: LDRS

Birmingham Airport will receive an emergency loan of up to £18.5 million from the city council amid fears more may be required further down the line.

The city council – which along with six other councils is a shareholder of the airport holding company, BAHL – has agreed to make the loan following the “most severe downturn in [the airport’s] history”.

Passenger volumes from April to December were down by 91 per cent according to a statement issued by the airport.

The council’s cabinet agreed to make the loan at a meeting yesterday (Feb 9) – but concerns were expressed by opposition councillors that the council would have to lend more at a later date.

The meeting heard all seven local authorities making up the West Midlands were approached for financial assistance for the airport.

Four are making a loan along with the other shareholder, Ontario Teachers’ Pension Plan.

Cllr Meirion Jenkins (Con) said: “I see that we are having to provide a loan to maintain liquidity and we perhaps have no choice about that – because if we don’t and if they become insolvent, we could lose more.

“How much analysis has been done in terms of whether this is going to be sufficient?

“Because whatever we think about Covid and how it has been handled and strategy, I think one thing we can perhaps all agree on is that it has taken us all a bit by surprise in terms of the duration and severity which has hit the UK.

“Right now, looking at the prospects for air travel, I really don’t know what the future holds.

“My question is – if we put this money in […] how confident are we that more won’t be required? Because the impact on tourism travel and business travel might be worse than even we think it is going to be.”

In response, council leader Cllr Ian Ward said: “The risk here if we don’t put this loan in and ensure the liquidity of the airport is that we would lose control of the airport as seven metropolitan authorities.

“I think it is in the interests of all of the West Midlands authorities and the people across the West Midlands that we do continue to exercise influence over the airport.

“We would not want to see anything happen to the airport that was to the detriment of the economy and it is a significant contributor to the economy.

“The airport themselves have taken a conservative approach to the return of numbers flying as air traffic. So I think we can be reasonably confident this is a number that we will not have to revisit.

“Having said that, we don’t know with any certainty what will happen with the pandemic so there is always a possibility that this sum of money will not be sufficient.

“But we have taken all of the expert advice around that.”

Solihull and Walsall councils have confirmed they will also be lending millions to Birmingham Airport while other councils remain tighter-lipped.

As well as an emergency loan of up to £18.5 million from Birmingham City Council, Solihull Council has agreed a loan of up to £3.7 million while Walsall Council will provide up to £4.9 million.

Sandwell and Wolverhampton councils confirmed they would not be providing loans, while Dudley Council declined to comment.

Coventry City Council said it was “committed to helping the airport” but would not confirm at this stage if a loan was being planned.

Coventry City Council leader Cllr George Duggins said: “Despite the COVID-19 pandemic, Birmingham International Airport remains one of the most important economic drivers in our region and will play a crucial role in our region’s recovery.

“It employs around 7,000 people, supports more than 25,000 associated jobs and is worth around £1.5 billion to our economy, bringing many benefits to Coventry residents and businesses.

“But like the aviation industry as a whole, the global coronavirus pandemic has hit the business hard and it is understandably facing unprecedented and difficult times.

“As one of the seven shareholders in the airport, which has brought us considerable financial dividends to support our services in recent years, we are committed to helping the airport to ensure it is ready to bounce back quickly and strongly when travel restrictions are eventually lifted and life returns to some sort of normality.

“However, if any such support was required, it would go through the Council’s political process in the normal way.”

Words: Mark Cardwell, Local Democracy Reporter


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