Increased investment for Airport but Government ‘needs to get finger out’
Waterford Airport.
Waterford City and County Council called a special Plenary Council meeting on Tuesday, April 23, where matters relating to costs of the development of Waterford Airport were discussed.
The Council Chief Executive Officer, Michael Walsh, explained in detail to the local councillors how the development of the runway, to accept jet aircraft with capacity to carry in the order of 150 passengers, will now cost an estimated €27 million.
The initial estimated cost of the runway expansion was €12 million from all investors.
It was suggested by the Chief Executive that Waterford City and County Council should invest a new sum of €2.2 million. The local authorities in Kilkenny and Wexford would each invest the remaining €400,000, to bring the total investment from local authorities in the South East region to €3 million.
What would have been €5 million from regional investors and a matching €5 million from Government has also increased. The proposal suggested there would now be €12 million from Devin Regional Investments, which is now a partnership between the Bolster and Comer Groups, and that figure is subject to the Government matching the investment.
“This Council has entered into a non-binding memorandum of understanding with Devin Regional Investment and the Airport Company, and the company has made a formal application to the Department of Transport on this basis,” said Mr Walsh, as he addressed the special meeting.
He strongly recommended that local councillors accept the proposal “as a once-off opportunity to deliver a core piece of infrastructure for the region”.
He continued: “This is necessary to demonstrate regional commitment to the airport and members may reasonably ask ‘isn’t this an exceptional level of commitment from this Council given that the land transfer is included in the arrangement as well?’ In truth, it is, but the prize of delivering the core infrastructure in terms of regional economic and social development is equally exceptionally high, and the contribution has to be measured against the difficulty of securing investment over the years and the risks of achieving a return on investment,” said Mr Walsh.
The key provisions of the agreement between the Council, Devin Regional Investment and the Airport Company includes each of the entities making the investment as outlined above. Waterford City and County Council will transfer lands owned by it at the airport, to the airport company, at nominal cost, only if, and after, the extended runway has been completed and has received IAA accreditation.
The local authorities will receive 18 per cent of the share capital of the airport company with the investors receiving 80 per cent, and existing shareholders receiving 2 per cent, subject to the agreement of an EGM of the company.
The investors will, on execution of the contract, invest €2 million in the company, from which a maximum of €1.7 million will be paid to Waterford City and County Council to cover the costs of land and property purchased through the CPO process or by negotiation.
There is, however, a buy-back option for the investors, who will have the option to buy back the local authority shares over a six-year period on a sliding scale, subject to successful operation of the airport as a going concern.
Mr Walsh gave what appeared to be an honest account to his Council colleagues whereby he openly identified “significant risks” in achieving a return on investment.
One of those risks is that the airport, according to a Grant Thornton report, is currently operating at a loss of €300,000 per annum.
In addition to that, 300,000 passengers a year would need to be generated through the airport before profit is made.
He also outlined that he would prefer not to be involved with the airport as “it brings with it responsibilities… that [the Council] have very little control over, and very little knowledge of”.
Continuing in his statement regarding the little knowledge the Council has in aviation, Mr Walsh described the Council’s competencies around the marketplace and engagement with airlines as “we’re a little bit looking into the jet engine, if I’m honest”.
With councillors taking the Chief Executive’s proposal into consideration, they acknowledged that he, Cllr Jim Griffin and Cllr Jody Power are members of the Airport Board and they have had some difficult and frustrating times over the last few years with the development of the airport.
Cllr Griffin asked that his fellow council members have “trust” in the Chief Executive’s proposal.
“I’ve no doubt in my mind that this is the best thing to do,” commented Cllr Mary Roche.
Meanwhile, Cllr Dónal Barry expressed his frustration directed at the top: “the Government needs to get the finger out.” The Chief Executive pointed out that this entire agreement is conditional and based solely on the Government’s decision to also match the investment.
“The reality is that Government decision is probably fragile, I’m not going to put it any better than that,” said Mr Walsh. “There’s a nervousness around spending public money in this environment, and that’s understandable, yet it’s a very unique opportunity,” he added.
The proposal was unanimously approved by councillors present at the special meeting.
