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NO PART: Teesside Airport board ‘played no part’ in operator exit

NO PART: Teesside Airport board ‘played no part’ in operator exit

Teesside International Airport, Image: LDRS

A councillor says the board at Teesside International Airport played no part in the decision to rip up the contract of previous operator Esken or the handing over of the company’s 25% shareholding to a newly set-up charitable foundation.

Councillor Glyn Nightingale, Redcar and Cleveland Council’s nominated member on the airport board and cabinet member for resources, was quizzed by former council leader Sue Jeffrey on what the board and the council knew of recent developments.

Two limited companies are connected to the airport – Teesside International Airport Limited, which is responsible for the day-to-day running of the business and contains a number of local authority-nominated directors, and Goosepool 2019, the airport’s financial holding company, both subsidiaries of the Tees Valley Combined Authority.

Councillor Glyn Nightingale

Councillor Glyn Nightingale, Image: Redcar and Cleveland Council

Liberal Democrat Cllr Nightingale said the ending of the agreement with Esken – previously known as the Stobart Group – was not a decision taken by the airport board and the sale of the shares it held in Goosepool 2019 was approved courtesy of a written resolution by Goosepool’s own board of directors.

Cllr Nightingale said: “The withdrawal of Esken and the proposal to set up a charitable foundation to take over the 25% stake was due to be noted at the airport board meeting on July 29.

“Unfortunately the airport board was notified that due to key staff contracting covid or self-isolating, the meeting was postponed, and it was actually held on the 21st [of August].

“The decision about the termination of the Esken contract was an internal operational issue.

“I also played no part as an airport board member or as a Redcar and Cleveland Council member in the decision making regarding the foundation.”

Cllr Nightingale said it was the decision of Tees Valley Mayor Ben Houchen,  along with the chief executive of the combined authority, Julie Gilhespie, to transfer the 25% shareholding to the new Teesside Airport Foundation under delegated powers.

He said: “The airport board had no role in the decision to transfer shares to the foundation.”

Cllr Nightingale said the council, which together with other Tees Valley-based local authorities retains a minority shareholding in the airport, also knew nothing of Esken’s exit, along with the setting up of the foundation and the transfer of shares until it was announced as it was “not a shareholders decision”.

He also confirmed that the developments with the airport were not discussed by the council’s cabinet.

Cllr Jeffrey

Labour's Sue Jeffrey: Image: Stuart Boulton

Cllr Jeffrey said Esken had shared the financial and operating risks of the airport and asked if its pull-out had implications for future investment by the combined authority, whose cabinet recently approved an extra £10m for the airport after revenues were badly hit by the covid-19 pandemic.

Cllr Nightingale replied: “There are no implications for the investment fund and the funding used [for the £10m] was within the existing funding envelope.”

‘Un-joined approach’

A recently updated business plan for the airport showed it made a £13.8m loss in the previous year.

Meanwhile, the level of long-term debt associated with Goosepool 2019 has risen to £61.9m, figures show.

Cllr Jeffrey said there was a “very un-joined approach” being taken with the airport and asked Cllr Nightingale if he could give an example of any decision he had taken while on the airport board that had impacted on its operation.

Cllr Nightingale said: “I do share some of your suspicions about whether there is a rubber stamping exercise going on.

“There are obviously layers of responsibility in terms of decision making.

“The airport board has been involved in several decisions, including – off the top of my head – the decision to try and get planning permission for a business park and decision making about the connection to a rail halt.”

Cllr Nightingale added: “We should be confident that the airport is moving in the right direction.

“There are grounds for just a tiny bit more optimism with more flights, improved terminal facilities and sensible investment.”

Cllr Jeffrey later told the Local Democracy Reporting Service: “There needs to be more transparency about how decisions are made and much more public discussion about both the opportunities and the risks being taken on behalf of local people.

“They have put their trust in the Tees Valley mayor to deliver a successful airport, if he is confident that his plans and additional investment is going to speed up the time when the airport stops being a drain on TVCA resources and moves into profit then let’s see the details.”

‘Public purse’

Under the agreement reached with Esken as part of its exit, the company will be entitled to the proceeds of any future sale of the airport before January 25, 2023, up to an amount not exceeding £31.3m.

Mayor

Tees Valley Mayor Ben Houchen Announcing the New Route, Image: Tees Valley Combined

Asked to comment on this, a spokesman for Mr Houchen said it would result in “no impact on the public purse”.

He added: “The airport is not for sale and will never be for sale as long as Ben Houchen is mayor, and the next election is 2024.”

More than £40m was spent by the combined authority buying Teesside Airport following an election pledge in 2017 by Mr Houchen to secure it from previous owner Peel.

It has provided a further £19.4m to support operational expenditure, along with £15m towards capital expenditure.

A £34.4m loan facility has also been provided to the airport, money which can be drawn down as required over a period until March 31, 2029.

When he announced the establishment of the new charitable trust, Mr Houchen said it was to safeguard the future of the airport, while another protection also being put in place would mean a referendum would be required before a sale could be permitted.

At the time he said: “When I pledged to bring our airport back into public ownership and save it from closure, I said I would secure it for the future.

“That means making sure the great progress we’re making can’t be undone by rogue politicians.”

He added: “Stobart Group, now Esken, played a key role in supporting Teesside Airport with the transition back into public ownership.

“Their hard work has been an important part of getting us to this point.

“I’d like to thank them for the role they have played helping us get ahead of schedule in delivering our ten-year plan for our airport.

“Europe’s biggest airline, Ryanair, has returned to our airport, we’ve secured the return of TUI next year and a new comprehensive domestic schedule with Loganair.

“Now, with the airport having undergone a massive transformation to get it ready for increased passenger numbers coming with our summer holiday flight schedule, we can deliver an airport Teesside can be proud of once more.”

The updated business plan said the aim was to increase annual passenger numbers from 141,000 to more than one million by March 2026.

It said: “Passenger numbers have been increasing month on month since reopening after lockdown, driven primarily by the low-cost carrier Ryanair and the full regional services of Loganair.

“As we go into summer 2022 we expect to see further growth in these markets, plus growth from holiday charters.”

Despite the £13.8m loss last year, the business plan forecasts revenues of more than £30m by March 2025 and a potential return to profit within the next three years.

Commenting on the business plan, Mr Houchen said the airport was coming out of the past 18 months – a period during which covid-related travel restrictions grounded flights – “stronger than ever” .

He said: “As well as securing popular destinations that people across Teesside, Darlington and Hartlepool were crying out for, we’re also making headway on our business park, and the airport’s freeport designation means we’re perfectly positioned to welcome new investment and firms looking to place themselves at the heart of our area.

“We’re confident of welcoming more than 400,000 passengers through our new terminal next year thanks to all of the new flights we’ve secured, and our investment in the terminal, creating an airport people will want to use time and time again.

“Our airport is so much more than just flights to Alicante, behind the new routes are new jobs supporting families and the local community.

“This summer we’ve created 40 new jobs and this will continue to grow further as our airport does.

“Of course, we shouldn’t rest on our laurels, and that’s why we’re working harder than ever to secure even more new routes, airlines and operators.

“If the airport hadn’t been brought back into public control, it would have been a housing estate by now.

“Instead, we’re turning it around, supporting the local economy and jobs, and becoming an airport that people can be truly proud of.”

 

Words: Stuart Arnold, Local Democracy Reporter


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