Liverpool City Council has acquired a 20% stake in loss-making Liverpool John Lennon Airport from Peel Group for an undisclosed sum and promised taxpayers a return on their investment.
Mayor of Liverpool, Joe Anderson, said: “This opportunity to play a more active part in its future expansion and success makes it a sound investment for the city council.”
The terms of the deal have been kept secret, other than the council would become part of two joint venture companies, not yet named.
Anderson added: “This is part of our Invest to Earn strategy where we are able to make investments that deliver a return which we can then plough back into supporting council services. This funding can only be used for investments and we are not taking money away from frontline services for it.”
The airport has grown significantly over the past 20 years under Peel’s control through investment in the expansion of the terminal facilities, funded partly by the European Union, and the rise of low-cost airlines. The airport has struggled to break even during that time and the latest filed accounts for Liverpool Airport Holdings show a pre-tax loss of £87,000 in the year to 31 March 2015, rising to a £6m loss after tax, on turnover of £31.7m. In 2014 the airport posted an £108m pre-tax loss, due to an £89m impairment on fixed assets, and before that a £6m pre-tax loss in 2013. Liverpool Airport Holdings refinanced £72m of bank debt with HSH Nordbank in August 2015, after auditor KPMG raised concerns about the airport’s ability to keep trading. KPMG has since resigned as auditor.
Liverpool airport was under civic control from 1961 until 1990 when it was privatised and British Aerospace acquired control with 76% of the shares, the council retaining the balance. Peel acquired the British Aerospace shares in 1997 and bought out the council in 2001, taking 100% control. In 2010 Peel sold 65% to Vantage of Canada, but the Canadians sold the stake back in April 2014.
Robert Hough, chairman of Liverpool John Lennon Airport, said: “We are delighted by the city council’s decision to invest in LJLA. This investment complements the council’s existing role in supporting the local and regional economy and allows the city to share in the financial success of the airport. They will bring strong support both financially and strategically, with interests aligned to those of Peel and the wider City Region.”
Passenger numbers at the airport in 2015 were 4% down on 2014 at 4m, according to the latest audited accounts for Liverpool Airport Holdings.