NEWCASTLE council says a meeting will be held this week to "dispel claims" the airport it owns with Port Stephens council is at "genuine" financial risk or that a ratepayer bailout is on the cards.
Port Stephens Council has remained silent on the issue, with both the council and mayor Leah Anderson declining to answer questions after a Newcastle Herald investigation revealed the airport is in need of a funding injection.
A City of Newcastle spokesman said the fact the airport's property arm is "currently operating at a loss" and is being funded by the aviation side of the business "should not be surprising".
"It was never considered that shareholders would make a return from the business in the short term," he said. "This is because Astra Aerolab is in the process of being developed right now.
"It is so early in its existence that its roads and utilities are still being built, and its buildings are awaiting development application approval."
The Herald put questions to both councils about whether they had been involved in discussions about financially supporting Newcastle Airport, what the nature of any discussions was and whether the councils would be willing to provide funds.
The councils were also asked to address what form financial support could take, whether the airport would be required to pay any funds back and if funds have been requested, how much money was needed and how long for.
The airport's multimillion-dollar terminal expansion faces cost blowouts amid falling passenger numbers and unbudgeted spending for the Kongsberg missile factory and Lockheed Martin Air 6500 project.
While the Federal Government announced an $850 million partnership with Kongsberg and $500 million contract with Lockheed Martin, both projects will require airport funding to manage the builds in return for long-term leases of the factories.
Internal reports obtained by the Herald show staff have warned that the organisation is in financial trouble and does not have a clear plan to fund major projects.
Newcastle Airport upgraded its financial management risk rating since February to "extreme" with one document outlining a recent board direction to develop a plan to cut jobs.
The Newcastle council spokesman said lord mayor Ross Kerridge and the council's Audit and Risk Committee will be briefed by the airport's chief executive, chief financial officer and chair at a meeting that is being put together for later this week.
"This is a sensible step in dispelling claims a ratepayer bailout is on the council agenda, or the airport is at genuine financial risk," he said.
"All businesses that are going through a rapid transformation require careful and increased oversight by its management and board.
"This is done in order to ensure the growth phase delivers on the long-term strategy to be the airport the region deserves."
The organisation's loss-making property development arm, Greater Newcastle Aerotropolis (GNAPL) survives due to cash injections from the airport's general operations (NAPL).
A financial management review undertaken in April detailed the possibility of seeking a bailout from Newcastle and Port Stephens councils, but warned it would require approval from Local Government Minister Ron Hoenig.
The report said that "willingness of councils to provide funding is also uncertain" and that "the capacity of the shareholder councils to support the group is unclear".
"For example, the forecast debt levels of the group are likely to represent a disproportionate share of both shareholder council's gross debt levels ... Shareholder councils have not provided management with a clear mandate to engage the Office of Local Government to seek ministerial approval for a shareholder funding facility," the report reads.
The airport's outgoing CEO Peter Cock issued a statement last week denying there were any problems.
The Herald reported on Saturday that Cr Kerridge planned to call for a meeting with the airport's senior management.
