Greater Manchester councils loan Manchester Airport £200m

Greater Manchester’s councils, including Rochdale Borough Council, have agreed to lend more than £200 million in a scheme to fund Manchester Airport’s £1 billion ‘super terminal’ project.

The expansion plan is due to more than double the size of Terminal Two and add 10 million annual passengers over the next decade.

The new terminal is set to open in 2020, with the whole scheme, including the demolition of Terminal One and a new car park and access roads, due for completion in 2023.

Manchester City Council, as the joint largest shareholder of the airport alongside private investor IFM, has agreed to loan the Manchester Airport Group (MAG) £125m to support its transformation programme.

The loan is split across two years, with £50m being invested this year and a further £75m in 2019/20.

It will also go towards supporting around £480m worth of improvements to Stansted airport, which was acquired by the MAG group in 2012.

The transformation plan for the London airport involves building a new arrivals building at the side of the existing terminal which will provide both additional capacity and enhanced retail space.

The remaining nine GM councils; Salford, Trafford, Bury, Bolton, Rochdale, Oldham, Tameside, Stockport and Wigan, who have an equal 3.22pc share in the MAG holding company, are also to loan around £11m each.

The loans will be repaid over 40 years, and the airport pays an annual fixed interest rate of 12%.

This, says Manchester council, makes it a ‘win-win’ investment which will bring in millions of pounds more a year for the town halls.

A council spokesman said the importance of the airport could not be ‘overstated’.

A report to its executive cabinet makes clear that the loans are crucial in ensuring that the airport continues to pay its dividends, which the authorities increasingly rely on for their revenue budgets.

It states: “The airport transformation programme that the loans are supporting should enable the future anticipated dividend rates to be paid.

“Without the capital investment there is a very real risk that the level of dividend payable will reduce considerably in future years.”

Earlier this year the Greater Manchester authorities shared a £71m dividend windfall from the airport, which went towards supporting services and balancing the books.

A Manchester City Council spokesman said: “Manchester Airport makes a huge contribution to Manchester and Greater Manchester as an international gateway, supporting jobs and investment.

“Its importance to the city and region cannot be overstated.

“Every year, it generates a significant financial dividend for the council – for 2017/18 alone this was almost £53m – which supports services for the people of Manchester.

“The other Greater Manchester local authorities also receive dividends in proportion to their shareholdings.

“This one-off investment will support the continuing development of MAG and the transformation of Manchester Airport and help ensure that the group remains in a thriving position to pay this dividend.

“As it being repaid to the council at a commercial rate of interest, it will also bring in around £6m extra a year from next year so it is a win-win.”

It’s aimed that the huge transformation project, which is one of the biggest construction programmes in the north of England, will also bring off-peak security queues down to just five minutes and double airport jobs to 40,000.

People will also benefit from automatic bag-drops, more stands for aircraft and a supersized car park.

More than 70 airlines operate from Manchester, flying to 220 destinations.

Nearly 28 million passengers used Manchester Airport between April 2017 and March 2018, compared with 26.2m in the previous 12 months.

Charlotte Green, Local Democracy Reporter