By Carmelo Garcia – Local Democracy Reporter
Gloucestershire Airport is now costing taxpayers around £2.7m a year, council chiefs have revealed as they say “nobody is to blame” for the sale fiasco.
Pressure is mounting to increase income and reduce costs at the Staverton site which is jointly owned by Cheltenham Borough Council and Gloucester City Council.
The planned sale of the airport fell through earlier this month after more than eight months of negotiations with preferred bidder Horizon Aero Group.
The sale ultimately collapsed because the offer was “nowhere near the original offer price”.
But it was also revealed last night (March 30) that the operating loss at the site has increased from £1.4m to £2.7m since the site was first marketed with an asking price of £25m.
Officers also said the City Council would have received a total of £4.5m once the sale had gone through after all debts were paid off.
Council leader Jeremy Hilton (LD, Kingsholm and Wotton) told the overview and scrutiny committee that nobody was at fault.
“Nobody is to blame, it’s just one of those things a sale fell through,” he said.
“The bidders worked really hard and I know the chief executive of Horizon worked exceptionally hard to try and get the purchase over the line.
“That’s why we gave him extra time while he was seeing if he could secure other backers.”
Cllr Hilton also shed some more light on the type of bidders that had come forward for the site and explained that most of those interested in operating the airport were consortiums.
“Everybody tried their very best,” he said. “I know the officers of both Cheltenham Borough Council and Gloucester City Council and also our agents Savills and BPE [solicitors] worked really hard to deal with that.
“It is a very difficult and complicated site so we do know we have an exceptionally good data room if we were to put the airport back up for sale.
“But in the meantime, the short term objective is to keep the airport operational”
He said they have been to the airport to reassure staff and tenants at the site and explained that he did not know what the future options for the site are but will be presented with options next week.
“What we need to do is keep calm, be considered and take our time on it. But it’s unfortunate the sale fell through,” he added.
Cllr Hilton said selling the site was not his first preference but it was the only option available at the time to keep the site operational.
He said a buyer was needed who had the working capital to invest in new hangars, up-to-date radar and the development of the planned CGX business park.
Making the airport a site which is attractive for business jets to land, be stored and maintained would help bring in income, Cllr Hilton added.
“The landing fees and sales fees and everything else for a business jet are considerably better than for single propeller private aircraft,” he said.
“They don’t make much money for the airport at all.
“We need those other ones in there. But in order to get those jets in there you need the hangars.”
Chairman Andrew Gravells (C, Abbeydale) asked at what point over the last eight months did Cllr Hilton realise the sale was “never going to happen”.
He replied saying “a few weeks ago when we were getting near to the end and we were waiting for the final offer.”
“A couple of weeks ago I got a copy of the letter from Horizon Aero Group giving us the last two offers. Receiving advice from officers that it was probably unacceptable.”
Cllr Hilton said he agreed with Cheltenham Borough Council leader Rowena Hay and said the offer was “nowhere near the original offer price”.
“It would have left us with a liability to operate an airport,” he said.
“It seemed no point in continuing with a sale that did not meet our original requirement that you bought the airport for above the asking price, you had a business plan for development of the airport and you had the working capital to buy and develop the airport.
“And there would be strict overage conditions and covenants on the site to ensure it was only developed for aviation and business purposes and nothing else.”
Vice-chairman Tree Chambers-Dubus (L, Moreland) asked how the failure of the sale will affect the council’s ability to pay back their £15.5m emergency Government bailout loan.
Andy Hearne, the City Council’s head of place, said the capital contribution from the airport the authority would have seen once all the debt was paid off, was factored into their consideration.
“It wasn’t completely put into the budget for this year but yes, the £4.5m that would have been left once it was all gone would have gone towards our exceptional financial support [EFS] recovery,” he said.
“That said, we’ve now lost that, so we’ve already started to look at what our secondary measures are.
“We know we’ve got to achieve capital sales to pay off the EFS position.”
The council has a plan in place, he added.
Councillor Alastair Chambers (Community Independents, Matson, Robinswood and White City) said that it had been reported the airport is making a loss when it was previously making a small profit.
He asked how much was being lost per year in comparison to before.
Mr Hearne said at the start of the marketing process the loss was approximately £1.8m across the two councils.
“As we stand today, the estimated loss is around £2.7m so it would be around £1.35m [for Gloucester City Council], an increase of £450,000 per council.
Cllr Chambers also asked how much the failure to sell the airport has cost taxpayers in legal, consultancy, officer time and agents fees.
Cllr Hilton said it was “pretty modest” and it was around £150,000.
“You need to incur that cost to sell an asset as complicated as this one,” he said.
Cllr Gravells asked if the costs are expected to rise.
“Turbulence,” Cllr Hilton replied, “we don’t know”.
“The objective, obviously Andrew, is to drive down the losses so that will be one of the first discussions we will be having.
“What the immediate actions that can be taken by the airport board with the support of the shareholders to drive down those losses.”