Out-Law News 2 min. read
10 Oct 2013, 12:10 pm
According to letters between the Scottish Deputy First Minister, Nicola Sturgeon, and the New Zealand based operations firm (4-page / 270KB PDF), the sale is to be completed "on a commercial basis in line with the market economy investor principle". In a statement on its website, Infrantil said that it did not expect the transaction to "give rise to any material proceeds".
Infrantil has struggled to find a buyer for the airport, which it put up for sale alongside Manston Kent Airport in March 2012. In May 2013, it wrote down the combined value of both airports to £11 million. In a statement to the Scottish Parliament, Sturgeon said that the company had been considering closure of the airport, which would have been "a serious and unwelcome development for both the Ayrshire and the Scottish economies".
"We have been carefully examining the implications and consequences of both options - public ownership and closure," Sturgeon told MSPs.
"We believe that Prestwick Airport can have a positive future. It will require investment and take time, but we believe that it can be returned to profitability. We also estimate that the cost to the public purse of closure would be very significant, and that was an important factor in our decision. We are therefore determined that the airport's economic contribution, including the direct and indirect employment opportunities that it and its related businesses offer, should be maintained and then enhanced," she said.
The Scottish Government will now carry out detailed negotiations on the terms of sale with Infratil, which it aims to conclude by 20 November. Infratil has agreed to ensure the airport remains open and fully operational while the process is carried out.
Sturgeon told the Scottish Parliament that once the airport had been transferred into public ownership, a "strong and credible business plan" containing a timetable for the airport's return to profitability would be developed. Although a fuller statement would be made once negotiations had concluded, she said that it was likely that the Scottish Government would "engage a commercial partner" to operate the airport with its existing staff.
Prestwick Airport supports around 1,400 jobs in the area, while a further 1,800 are employed as part of the aerospace "cluster" surrounding the airport. However both passenger numbers and freight passing through the airport have fallen considerably over the past few years, and the airport is now losing approximately £7m a year in both operational losses and capital expenditure, according to figures provided to the Scottish Government by Infratil.
The Scottish Government already has responsibility for 11 airports in Argyll and Bute, Orkney and Shetland under a wholly-owned company, Highlands and Islands Airports Ltd. Other major UK airports including Manchester, Stansted and Newcastle are owned wholly or substantially by the public sector. Most recently, Cardiff Airport was purchased from its private operator by the Welsh Government in March.
