Liverpool Council is expected to reject the opportunity to invest in two new projects at Liverpool Airport.
A shareholder call is to be held seeking capital investment by the company operating the airport in Speke with funding required in the first quarter of the financial year. A report to go before Liverpool Council’s cabinet has recommended the local authority does not offer to stump up cash on this occasion.
In a bid to turn around its fortunes post-covid, two new investment projects have been identified by Liverpool Airport (Intermediate) No. 1 Limited, including the creation of a solar farm. The other is to take over and upgrade an existing fuel farm operation previously operated by Shell.
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It is expected that could save the council spending around £700,000 through its 10% stake in the airport. Should the local authority choose not to invest, its ownership share will be diluted by almost half to 5.6%.
The capital call comes after the airport was badly affected by coronavirus resulting in lower revenues and a decrease in its commercial value. The council report detailed that its current business plan “is based on growing back passenger numbers and recovering revenues to pre-covid levels in the medium term and investing in new projects to increase revenues.”
Liverpool Council invested £2m for a 20% share in the company when it entered into financial difficulty in 2015 and Peel invested £8m for an 80% share. Its commercial value subsequently increased significantly and four years later, alongside Peel, the council sold half of its shares to an Infrastructure Investor, Ancala, for £10.2m, retaining a 10% minority stake.
The local authority ultimately wants to dispose of this position over environmental concerns, the lack of income production, the need for capital receipts and because it is not considered a strategic priority for the council to have an ownership stake in the airport.
A dedicated meeting specifically to discuss this matter was held in February with the consensus being that the council should not participate in the call based on budget constraints, risk and additional investment in the airport not being aligned with the council’s strategy. The council report, to be debated next Friday, strongly advises the cabinet to adopt this suggestion as to do otherwise “constitutes further investment which is politically controversial.”
Earlier this year, the cabinet agreed to undertake an “evidence based review of all council policies and plans relating to green space and the environment” alongside a report “detailing the process for, and consequences of, removing all financial support from Liverpool Airport” after a Green Party motion called on the administration to strip its funding for the Speke site altogether.
