I WAS pleased to learn that North Tyneside Council and Mayor Linda Arkley have agreed not to contribute to the £100m loan that the seven local authorities, Northumberland and the six Tyne and Wear councils (LA7), are trying to raise to help refinance to £300m debt that the Newcastle Airport Holding Company took out in December 2006.
The interest charge on this debt is about £20m per year, which is more than the operating profit of the airport, so the debt was never going to be paid off.
The LA7 sold a 49 per cent share in the airport in 2001 to Copenhagen Airport for about £95m, so if the Newcastle Airport Holding Company wish to raise funds to help the cash flow repayments of the bank loan then the Copenhagen Airport should provide 49 per cent of the money.
When this £300m loan was taken out the Airport Holding Company paid out a special dividend to the shareholders of £163m, Copenhagen Airport was paid £80m and the LA7 £83m.
This loan should never have been taken out and used to pay these dividends, the chickens have now come home to roost, if the banks want their money back the only way is to sell the other 51 per cent share as the council taxpayers should not be asked to fund this loan.