Luton-9
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Thanks for the detailed explanation...Grateful.
Makes you wonder how the operator/concessionaire eases out of contractual commitments & if the Council have a legal team strong enough to recover for the Luton residents & taxpayers all or any of the investment/s being made.
Makes you wonder how the operator/concessionaire eases out of contractual commitments & if the Council have a legal team strong enough to recover for the Luton residents & taxpayers all or any of the investment/s being made.
The Council plan is that a new concessionaire will take over in 2031 who will pay off all the airport debts of around £500m as a one off upfront payment. Spend maybe £2 billion building a new airport and attaching it to the existing runway and extending the Dart. They will also be expected to pay a concession fee per passenger as before. The question is will they find a company willing to take on the protect? One thing is for sure, it would have to be something like a 99 year lease or longer.
Of course the government might turn the expansion down.
Last edited by LTNman; 29th Aug 2020 at 20:22.
The Council borrows the money at one rate and lends it to their airport company at a higher rate. The airport (LLAL) gets income by being a landlord and the collector of concession fees. It is then meant to keep what it needs to pay off the interest payments back to the council. It contributes to Council approved charities and pays the Council a dividend except the money has dried up.
LLAL has borrowed £225m for the Dart. £50m for its application to government for airport expansion and £19m buying a farm. Millions were spent on buying up land around the Dart station at Parkway. It also needs £60m this year and £23m next year for interest payments for its loans and a £18m overspend on the Dart plus spending on the DCO to government as part of it needs rewriting. LLAL also has outstanding loans around £40m going back many years but I have no idea what they spent it on as it is a secret.
The Council is also committed to spending over £100m on the terminal 2 access road and upgrading the A505.
Everything listed above should be spent by the existing concessionaire or the next concessionaire as they are meant to be carrying the risks but they are having none of it and want a Council funded gift.
LLAL has borrowed £225m for the Dart. £50m for its application to government for airport expansion and £19m buying a farm. Millions were spent on buying up land around the Dart station at Parkway. It also needs £60m this year and £23m next year for interest payments for its loans and a £18m overspend on the Dart plus spending on the DCO to government as part of it needs rewriting. LLAL also has outstanding loans around £40m going back many years but I have no idea what they spent it on as it is a secret.
The Council is also committed to spending over £100m on the terminal 2 access road and upgrading the A505.
Everything listed above should be spent by the existing concessionaire or the next concessionaire as they are meant to be carrying the risks but they are having none of it and want a Council funded gift.
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LLAL or London Luton Airport Ltd is the airport owner and is in turn owned by the Council. The Council gifted the airport to LLAL in 1998.
The Council also handed over the towns Wigmore Valley Park, which is one of the towns biggest parks in a secret move to provide land for a second terminal without telling the locals. At the moment this park is licensed to the airport.
LLAOL or London Luton Airport Operations Ltd is the Concessionaire. LLAOL is majority owned by Aena, who are the worlds largest airport operator and are Spanish and AMP Capital, which is an Australian investment company that owns 49% of LLAOL. They paid £350m just 2 years ago for a stake in Luton that will have to be handed over after 13 years. Seems like a bum deal to me.
AMP Capital own Leeds Bradford Airport and has a stake in Newcastle Airport.
More details here about them buying into Luton and the reasons why. https://uk.reuters.com/article/us-lu...-idUKKBN1HV142
The Council also handed over the towns Wigmore Valley Park, which is one of the towns biggest parks in a secret move to provide land for a second terminal without telling the locals. At the moment this park is licensed to the airport.
LLAOL or London Luton Airport Operations Ltd is the Concessionaire. LLAOL is majority owned by Aena, who are the worlds largest airport operator and are Spanish and AMP Capital, which is an Australian investment company that owns 49% of LLAOL. They paid £350m just 2 years ago for a stake in Luton that will have to be handed over after 13 years. Seems like a bum deal to me.
AMP Capital own Leeds Bradford Airport and has a stake in Newcastle Airport.
More details here about them buying into Luton and the reasons why. https://uk.reuters.com/article/us-lu...-idUKKBN1HV142
Last edited by LTNman; 20th Aug 2020 at 16:53.
Cheers. So LLAOL are the utility and LLAL own the assets without time limit. What's the problem in principle of LLAL borrowing against future earnings assuming they can still offer a concessionaire a decent model? Why should the concessionaire be expected to invest in assets owned by LLAL - isn't that LLAL`s job?
Easy for me to ask questions but I guess you are off to work!
Easy for me to ask questions but I guess you are off to work!
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As part of the concession agreement extension, LLAOL agreed to invest money for airport expansion. They have paid for the capacity to be increased from 12 million to 18 million passengers. The original concessionaire paid for the new terminal to be built back in I think 1999. As LLAOL don't own the asset they have spent as little as possible on the upgrade. It's a bit like someone renting a home. The house is often easy to spot as it normally need decorating but the renter won't spend the money doing it up.
The problem with LLAL, or should I say the Council investing in future earnings is that all of the money they are spending is connected with airport expansion. If the Government turns down the Development Consent Order application, which has been delayed by a year, all the money spent has been wasted, as there will be no return on the investment. LLAL was set up as a zero risk company but now it will have close to half a billion pounds worth of debt by next year. LLAL can't pay its debts so has gone to its banker for a bail out. The banker is the Council who will lend it a further £83m over the next 2 years. Much of this money will be used to pay the Council back its own money as interest payments. LLAL can't go direct to the money market as another lender will have claim to the airport if LLAL can't pay them either.
The real losers are the town ratepayers. They have lost the airports dividend, which would have been lost anyway even with no airport debt but the situation is much worse as they are having to bail out the airport due to its massive debt. Also another £18m is needed for the Dart due to an overspend and the Development Consent Order needs more money thrown at it after the legal case at Heathrow over the 3rd runway.
Meanwhile every part of Council spending is being cut back apart from the airport, which is seeing a massive increase. The Council are even introducing an airport stealth tax on is residents who will now have to pay more if they want all their bins empty.
The Council tell the towns people as little as possible, which is why they want to hold airport funding meetings in secret and why they never publish LLAL minutes.
The problem with LLAL, or should I say the Council investing in future earnings is that all of the money they are spending is connected with airport expansion. If the Government turns down the Development Consent Order application, which has been delayed by a year, all the money spent has been wasted, as there will be no return on the investment. LLAL was set up as a zero risk company but now it will have close to half a billion pounds worth of debt by next year. LLAL can't pay its debts so has gone to its banker for a bail out. The banker is the Council who will lend it a further £83m over the next 2 years. Much of this money will be used to pay the Council back its own money as interest payments. LLAL can't go direct to the money market as another lender will have claim to the airport if LLAL can't pay them either.
The real losers are the town ratepayers. They have lost the airports dividend, which would have been lost anyway even with no airport debt but the situation is much worse as they are having to bail out the airport due to its massive debt. Also another £18m is needed for the Dart due to an overspend and the Development Consent Order needs more money thrown at it after the legal case at Heathrow over the 3rd runway.
Meanwhile every part of Council spending is being cut back apart from the airport, which is seeing a massive increase. The Council are even introducing an airport stealth tax on is residents who will now have to pay more if they want all their bins empty.
The Council tell the towns people as little as possible, which is why they want to hold airport funding meetings in secret and why they never publish LLAL minutes.
Last edited by LTNman; 20th Aug 2020 at 17:13.
Thanks for your time in answering. There's trouble brewing over councils that decided they were competent to invest in retail and commercial space too. Oh well.
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A good news storey involving the airport, don't know if it was a special charter as I am not aware if any routes to Beirut UK Sends Medical Equipment to Help Battle Coronavirus in Beirut ? Naharnet
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Well it gets a little worse for the Council. There is a force majeure clause in the contract between LLAOL and LLAL. Even with no passengers LLAOL still has to cough up I think £3m to LLAL. It has been reported that lawyers are looking at the contract as LLAOL want to invoke the clause and keep the £3m.
The road for Terminal 2 is meant to be funded directly by the Council for tax reasons. It should be noted that the road is not part of the Development Consent Order. With the Council not having 2 pennies to rub together they will have to borrow even more money to fund it. I think the first phase is costed at over £40m. According to SEMLEP the final bill will be over £100m.
Again the Council wanted to build the road before the expansion decision was made to save time but delays mean this won’t now happen.
The road for Terminal 2 is meant to be funded directly by the Council for tax reasons. It should be noted that the road is not part of the Development Consent Order. With the Council not having 2 pennies to rub together they will have to borrow even more money to fund it. I think the first phase is costed at over £40m. According to SEMLEP the final bill will be over £100m.
Again the Council wanted to build the road before the expansion decision was made to save time but delays mean this won’t now happen.
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FYI https://www.theguardian.com/tv-and-radio/2019/jul/29/stacey-dooley-work-really-hard-one-of-few-talents
”Journalist” “...She sold perfume by day at Luton airport...”
”Journalist” “...She sold perfume by day at Luton airport...”
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I am sure this will not affect the new golden road, rail link and Terminal 2........
https://www.swissinfo.ch/eng/wizz-ai...treat/45989468
https://www.swissinfo.ch/eng/wizz-ai...treat/45989468