Kerry Airport to book €306,000 loss as unusual investment turns sour in Covid crisis

Losses will likely raise concerns about its long-term sustainability

Kerry Airport, whose projected losses will reach levels 'not seen before in the airport's history'. File Picture.

Kerry Airport will book a loss of almost €306,000 on an unusual €1.5m investment it said it took on shares and other assets which disastrously soured when markets crashed at the onset of the Covid-19 crisis, the Irish Examiner has learned.

It comes as Kerry Airport moved to lay off, on a temporary basis, around half of its 50 full-time staff as it scrambled to stem further significant losses from the fallout of the Covid crisis.

Kerry Airport, like Dublin, Cork, and Shannon, has been hard hit as airlines cut schedules or stopped flying altogether and passenger numbers slumped amid health concerns or government restrictions on international travel.

However, the news that Kerry Airport will book even higher losses because of bad market investments will likely raise concerns about its long-term sustainability.

According to its 2019 accounts, Kerry Airport received Government grants of €1.9m last year and held, in total, grants worth many millions relating to capital expenditure and public policy funding schemes under the Department of Transport’s regional airport programme.

A spokesman for the airport said the market investment, which was worth €1.5m at the end of 2019, was due to mature at the end of March.

The investment, which was described as a European fixed-rate bond, was bought through a bank, which the airport said it will not identify.

The investment was part of a portfolio as recommended by the unnamed bank and had been running for three years. It was in the black in February just ahead of the collapse of markets amid the Covid crisis, said the spokesman.

The airport said it had agreed with the unnamed bank managing its investment a loss limit of 20%, but that the losses nonetheless during the March market slump exceeded that protection limit.

The airport will not say what the underlying assets were on which its bond investment was based that led to the loss of €305,931 but described the investment as involving stocks and shares.

The airport took a medium risk on the investment and there was guaranteed income every year but the maturity of the bond coincided with the drop in the markets, said the spokesman.

Kerry Airport handled almost 369,840 passengers last year and posted a net profit of just over €1m on revenues of €8.6m.

Those revenues included over €2.8m on fuel sales to airlines, €394,800 from gift shop sales, as well as €398,345 in income from its car park.

However, amid the Covid-19 crisis, “most commentators predict that air travel will not return to near 2019 levels until at least 2023”, said the airport in the 2019 accounts.

“Thus the directors consider the implications of the Covid-19 pandemic to be a significant uncertainty at the time of approving the financial statements,” it said, adding that the airport projected losses this year, “major trading losses not seen before in the airport’s history”.