Cork Airport debt row takes new twist

THE Dublin Airport Authority (DAA) has warned the proposed separation of Cork and Shannon could be jeopardised unless it is allowed to increase airport charges.

Even then, Cork could have to wait years for independence unless it agrees to shoulder the cost of its €160 million new terminal.

The DAA, which replaced Aer Rianta as the State company overseeing Dublin, Cork and Shannon, yesterday unveiled profits of €50 million for 2005 an increase of 61% on the previous year's €31m figure.

But DAA chairman Gary McGann said it would struggle to move ahead with the investment programme for Dublin unless allowed to raise airport charges by the aviation regulator.

Last September, the regulator announced that Dublin Airport could charge no more than €6.14 per passenger up to 2009.

Yesterday, Mr McGann said that, on average, the equivalent charge at European airports was €11 per passenger.

"This leaves Dublin Airport significantly underfunded at a time when it must deliver a €1.2 billion development programme at the airport over the next decade," he added.

Mr McGann said the proposed separation of Cork and Shannon would also be threatened if airport charges remained static.

And he warned that Cork's independence would be further threatened by the reluctance of the Cork Airport Authority [CAA] to shoulder the €160 million debt associated with the terminal, scheduled to open in May.

The DAA says that, under company law, it must have sufficient distributable reserves essentially, retained profit before transferring Cork and Shannon as dividends.

Adding Cork's terminal debt to the DAA's balance sheet would not help the situation, Mr McGann stressed.

"Based on all reasonable forecasts, it will not be possible to achieve a 'debt-free' Cork Airport Authority and a separate, autonomous Cork Airport Authority for some considerable time to come," he said.

He made clear his belief that Cork should pay its own debt.

But Cork TDs said the airport would be financially crippled if forced to burden the cost of the terminal.

Fine Gael TD Bernard Allen said the Government had made a promise that Cork would start life as an independent airport debt-free.

"The DAA's mind seems closed to that promise," he said.

Labour TD Kathleen Lynch said the terminal was only the start of development at Cork. "The airport needs a second runway, and needs more apron space. If it is to carry any of the terminal debt, it will put further development in jeopardy."

Green TD Dan Boyle said the DAA would earn a significant amount of money from the forthcoming sale of its Great Southern Hotel chain. "I don't accept [the DAA] saying that there isn't sufficient liquidity to allow Cork become independent and debt-free," he said.

A DAA spokesman last night said nothing was expected to happen with the separation proposals "in the short term" because the company's distributable reserves had first to be increased.

Members of the Cork Airport Authority will meet with the Transport Minister today. Asked about the apparent logjam last night, a spokesman for the minister said: "We'll continue to work at it that's all we can say for now."