Airport debt may cost council £20m

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COUNCIL bosses on Wearside may have to borrow millions of pounds to help Newcastle International Airport re-finance its debts.

Sunderland City Council is proposing to give up to £20million to the airport, which is jointly owned by seven North East authorities and Copenhagen Airports, to help with the re-financing.

This is because as a consequence of the recession the amount of money available from their banks is now lower than first thought.

The council says that it will make the money back through interest and dividends from the airport and in a worst case scenario it expects to at least break even on what was borrowed.

But when asked about the possible spend Sunderland City Council declined to comment as South Tyneside Council is the lead authority.

A statement on behalf of the seven authorities said: “Newcastle International Airport Ltd confirmed in May that it had commenced the process of refinancing a £298million net debt.

“The local authorities intend to retain their 51 per cent holding in the airport and are building provisions into their budgets to enable them to invest based on the estimated minimum amount that banks could lend.

“They are each considering investing amounts based on their individual shareholding.

“Negotiations are at a commercially sensitive stage and so we are unable to say anything else other than the planned investment will be at least revenue neutral based upon interest and dividends receivable from the airport business in future years.”

Councillor Iain Malcolm, leader of South Tyneside Council, said: “This is the right thing to do for the airport, for the communities we represent and for the North East economy.

“The airport is of enormous importance to our region, as a gateway and a jobs generator. The financial markets have changed but the airport remains strong, and we expect it to get bigger and stronger.

“Investment by the local authorities in the airport is a sensible and prudent step, and will help to achieve our objectives for the local economy, specifically in relation to jobs, transport, and the environment.”