Prestwick-2
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Speculation that the airport could close according to this article.
https://www.scotsman.com/news/transp...sale-1-5049720
https://www.scotsman.com/news/transp...sale-1-5049720
An aviation company chief who offered to buy debt-ridden Prestwick Airport fears it could be closed or scaled down if a sale cannot be secured.
Orbital Access chief executive Stuart McIntyre said nearly £40 million lent by ministers to keep the South Ayrshire site going was likely to have caused the sale to be delayed.
His comments follow transport secretary Michael Matheson admitting to MSPs that a deal could fall through, as The Scotsman revealed yesterday.
Mr Matheson wrote: “While efforts are currently focused on returning the airport to the private sector, which has been our intention since purchasing the airport in 2013, should this not be achievable for any reason we will consider options for taking the airport forward in the future.”
The airport was put up for sale in June, with official documents stating that a preferred bidder was expected to be chosen in the first week of September and the sale completed by about 4 October.
Mr McIntyre said his bid, which was made with investors independently of Orbital Access last year, had foundered because of the Scottish Government’s unwillingness to negotiate over the sale including responsibility for the £40m debt.
He told The Scotsman: “Our submission was rejected over the pivotal matter of the treatment of the Scottish Government debt.
“It was most certainly the stumbling block, and I would not be surprised if the debt question has become the problem in the current sale process.
“It certainly appeared to be a red line - the Scottish Government was unwilling to enter any substantive negotiations over it.
“The debt has been used to cover operating losses, not for infrastructure improvements, so it has had no economic value.
“Any acquirer of the airport will need to make significant infrastructure investment to put it on a level with competitors, such as to hangars and freight facilities.
“We proposed £100 million, plus a further £200 million from third parties.
“We decided not to renew our bid. Having been through it before, there was no point in spending on further bid costs.
“The fear of strategic Prestwick-based aerospace businesses such as ours is that the Scottish Government, if a sale isn’t achieved, will consider closure or a significant scaling back of airport operations with the associated devastating impact on the Ayrshire aerospace economy.”
A spokesman for the Scottish Government’s Transport Scotland agency said: “To protect the integrity of the process, we will not be making any further comment and will update Parliament at the appropriate time.”
Ministers bought the airport for a token £1 to avert its closure and the loss of hundreds of jobs.
Mr Matheson told MSPs last week that detailed scrutiny of bids by the airport’s management was taking longer than expected.
It is unclear who has lodged bids for the site, but both Glasgow and Edinburgh airports - Prestwick’s rivals - have denied they have made offers.
Orbital Access chief executive Stuart McIntyre said nearly £40 million lent by ministers to keep the South Ayrshire site going was likely to have caused the sale to be delayed.
His comments follow transport secretary Michael Matheson admitting to MSPs that a deal could fall through, as The Scotsman revealed yesterday.
Mr Matheson wrote: “While efforts are currently focused on returning the airport to the private sector, which has been our intention since purchasing the airport in 2013, should this not be achievable for any reason we will consider options for taking the airport forward in the future.”
The airport was put up for sale in June, with official documents stating that a preferred bidder was expected to be chosen in the first week of September and the sale completed by about 4 October.
Mr McIntyre said his bid, which was made with investors independently of Orbital Access last year, had foundered because of the Scottish Government’s unwillingness to negotiate over the sale including responsibility for the £40m debt.
He told The Scotsman: “Our submission was rejected over the pivotal matter of the treatment of the Scottish Government debt.
“It was most certainly the stumbling block, and I would not be surprised if the debt question has become the problem in the current sale process.
“It certainly appeared to be a red line - the Scottish Government was unwilling to enter any substantive negotiations over it.
“The debt has been used to cover operating losses, not for infrastructure improvements, so it has had no economic value.
“Any acquirer of the airport will need to make significant infrastructure investment to put it on a level with competitors, such as to hangars and freight facilities.
“We proposed £100 million, plus a further £200 million from third parties.
“We decided not to renew our bid. Having been through it before, there was no point in spending on further bid costs.
“The fear of strategic Prestwick-based aerospace businesses such as ours is that the Scottish Government, if a sale isn’t achieved, will consider closure or a significant scaling back of airport operations with the associated devastating impact on the Ayrshire aerospace economy.”
A spokesman for the Scottish Government’s Transport Scotland agency said: “To protect the integrity of the process, we will not be making any further comment and will update Parliament at the appropriate time.”
Ministers bought the airport for a token £1 to avert its closure and the loss of hundreds of jobs.
Mr Matheson told MSPs last week that detailed scrutiny of bids by the airport’s management was taking longer than expected.
It is unclear who has lodged bids for the site, but both Glasgow and Edinburgh airports - Prestwick’s rivals - have denied they have made offers.
Join Date: Mar 2009
Location: Scotland
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Speculation that the airport could close according to this article.
https://www.scotsman.com/news/transp...sale-1-5049720
https://www.scotsman.com/news/transp...sale-1-5049720
The 'admission' from Mr Matheson comes from the exchange of correspondence in the links below:
https://www.parliament.scot/S5_Rural...rport_sale.pdf
https://www.parliament.scot/S5_Rural...rport_sale.pdf
The response from Mr Matheson, dated 16th November 2019, also states "Good progress continues to be made and we are satisfied with how the sale process is developing".
It staggers me that "significant scaling back of aviation activities" is seen as a bad thing. It's not super complicated if you strip out the politics of the electoral damage inflicted if the long term decisions to right size the business are taken.
What component parts make money? Keep them and cut out the loss making operations that are a drain on the good parts.That means Ryanair being subsidised to operate one or two daily flights in winter out of a 1965 build terminal needs to end. That level of business can be done out of GLA and would help that private business to do better, it's no longer the case that GLA and PIK compete meaningfully in that space, they do not, GLA won, it's been game over for years.
If you strip the running costs of the terminal out you have a fighting chance to save the rest of the business, but the debt needs to be written off, as no one is going to take a punt on PIK nowadays with that sort of drag on performance.
But nothing will change so long as the SNP is in power and the Tories kept the place open to save George Younger for years. The more things change...
What component parts make money? Keep them and cut out the loss making operations that are a drain on the good parts.That means Ryanair being subsidised to operate one or two daily flights in winter out of a 1965 build terminal needs to end. That level of business can be done out of GLA and would help that private business to do better, it's no longer the case that GLA and PIK compete meaningfully in that space, they do not, GLA won, it's been game over for years.
If you strip the running costs of the terminal out you have a fighting chance to save the rest of the business, but the debt needs to be written off, as no one is going to take a punt on PIK nowadays with that sort of drag on performance.
But nothing will change so long as the SNP is in power and the Tories kept the place open to save George Younger for years. The more things change...
Join Date: May 2002
Location: SW Scotland
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£100m seems a fairly decent offer to me - the government only spent £1 on the airport, so if you write off £40m of debt, that's still a £60m profit. £200m of further investment would certainly be welcome too, and help modernise the airport
Given that its a space related company interested, it will also help cement PIKs place as a space launch facility. It will give Orbital Access a real incentive to operate in Scotland, and will bring considerable benefits to the local area. Without that incentive, they may well end up moving down to Newquay, which seems to be attracting a lot of government funding at the moment to attract space launch companies.
Sounds like an all round good deal to me... there must be a hell of a deal on the table if they're not considering it?
Given that its a space related company interested, it will also help cement PIKs place as a space launch facility. It will give Orbital Access a real incentive to operate in Scotland, and will bring considerable benefits to the local area. Without that incentive, they may well end up moving down to Newquay, which seems to be attracting a lot of government funding at the moment to attract space launch companies.
Sounds like an all round good deal to me... there must be a hell of a deal on the table if they're not considering it?
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Which makes you think, is that offer for real because, as nightawk117 points out, £100 million equates to repaying the SG debt of £40 million plus paying £60 million for an asset that cost the SG £1. If it is a real offer it is hard to fathom why the SG would turn it down unless it was conditional on, for example, being permitted to close the pax terminal and stop pax operations (other than biz jets and GA) and the SG couldn't stomach it. I have long agreed with Skipness' position, above, in that the only future is to stop subsidising FR, close the pax terminal and concentrate on what makes money. I really hope that this gets resolved soon as if it doesn't I could see the whole airport closing and the loss of PIK's 9,800 ft runway would be a real blow to UK aviation - in the current climate it's easy to close runways but very difficult to build new ones.
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The SNP started as a republican socialist party somewhat to the left of Corbyn, and it still has that fundamentalist tradition within it. However it is now funded by a number of tartan Tory businessmen, its policies tend to veer between the two. Just like some other political parties...
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Flybe have hinted in the past they'd consider PIK-LHR if a 3rd runway ever gets built. I'm sure the airport is also in talks with a few other airlines which might decide to take a chance on launching flights from there, plus there's always the possibility that GLA and EDI might reach capacity, causing flights to spill over to PIK.
There's always a possibility of growth in passenger traffic, depending on how the market pans out... so closing the door to it completely is a big risk.
Plus... we dont know that the passenger side does in fact lose money. They've kept it going for a long time... so maybe the rumours on here if it being a money pit are exaggerated?
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Or at the very least you could mothball the terminal which would be a lot cheaper than keeping it open. If you define an airport as being “full” by the runway(s) being at max capacity it will be a very long time until GLA and EDI are full. EDI growth appears to have plateaued for the moment and I think GLA is actually down a bit - presumably the reduction by FR. As such, there is no likelihood of PIK being “needed” for pax overspill in the foreseeable future.
"The debt has been used to cover operating losses, not for infrastructure improvements, so it has had no economic value".
Sums up the whole situation in one sentence - the place can't make anyone money as currently operated. But you'll have to wait until well after the election for anything to happen I'm afraid.
Sums up the whole situation in one sentence - the place can't make anyone money as currently operated. But you'll have to wait until well after the election for anything to happen I'm afraid.
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The airport is used for non-passenger aviation activity. If the airport can be profitable with this activity alone, then that should be the aim. If not, then why can’t the Scottish Government simply close the airport and retain the land? Would the ongoing costs (losses) for merely securing the airfield be negligible?
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Join Date: Apr 2006
Location: Prestwick, Scotland
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Well, the SNP saved Prestwick Airport, They have written off £33M of the debt, the place is now in operating profit, why would it not be with the traffic going through it ? There is another election in 2021, maybe a referendum, the local council would never approve housing, the airport employs several hundred, the environs several thousand in aviation related activities, there is an RN base in use for Merlins and TDY, a recent build Coastguard base that cost £8M, MROs handling BA, Ryanair, Easyjet, Norwegian and others, another hangar coming soon, Spirit putting up a science and technology centre, freight with for example Cargolux that won't be going anywhere else in Scotland, training, and whatever I've forgotten. The Scotsman has an agenda - it's an Edinburgh 'newspaper'. And any potential buyer has to be a serious buyer, subject to an NDA so cannot talk about it, and subject to due diligence, Does that answer some of the above rubbish, and even educate some of you just a little ?
the place is now in operating profit
The debt has been used to cover operating losses
" the local council would never approve housing"
How often do people write that about airfields? The developers offer them some sort of cut - cheap housing, schools etc etc and they get all those lovely new voters
How often do people write that about airfields? The developers offer them some sort of cut - cheap housing, schools etc etc and they get all those lovely new voters
Does that answer some of the above rubbish, and even educate some of you just a little ?
Any business can make an operating profit in a good year if someone else writes off their debts in total. Thomas Cook made an operating profit even in recent years.
So is the Scottish Govt simply writing off £33M of debt? Can someone confirm or link to that?
Well, the SNP saved Prestwick Airport, They have written off £33M of the debt, the place is now in operating profit, why would it not be with the traffic going through it ?
The costs of that terminal will kill off any buyer. it needs millions spent on it or it needs shutting. Even if all of the existing debt is written off, the first thing any new buyer needs to do is to take out a whole lot more to make up for recent under-investment. The existing business model is a joke, but as I said, there are profitable parts, just being dragged down by vanity and an inability to let the past go and get real.
BAA sold off and closed Runway 21/03, an appealing idea except it renders the whole airfield pretty much unusable for whole days at a time in winter as the main runway wasn't built into the prevailing seasonal gales!