The cost of extending the runway and redeveloping Waterford Airport now stands at €27m, as the business case has been described as 'fragile' by Waterford City & County Council CEO Michael Walsh regarding an impending decision from the Department of Transport.
A special meeting of all 32 Waterford councillors was held at City Hall this afternoon, where representatives were briefed on the current status of the business case for the long-awaited project.
Business forecasts from the private investment group, carried out by Grant Thornton, have outlined that Waterford Airport is currently making an annual loss of €300,000, and that annual passenger numbers would need to exceed 300,000 to see any potential profits.
At the height of it's success with London and Luton services, passenger numbers at Waterford Airport never exceeded 150,000 passengers.
"We have been trying with a considerable number of years to secure investment for the airport to extend and widen the runway and develop the necessary ancillary facilities to accept jet aircraft with the capacities to carry the order of 150 passengers", outlined the CEO.
To do so requires a runway of 45m in width and of operational length of 2000m. The existing runway is 30 metres wide and 1400m long from an operational perspective.
Over the past ten years or more the board has been seeking to attract private investment to the airport and this resulted in a proposal to government developed in 2017 that was finally approved in 2019 to extend and widen the runway with €5m of investment from government, €5m from predominantly regional investors and €2m from the local authorities.
Waterford Council proceeded to planning permission and compulsory purchase of the necessary properties and these were confirmed by An Bórd Pleanála in January 2022.
In the interim, increases in costs have altered the landscape significantly rendering the original proposal unviable. Mr. Walsh outlined that the proposal would also not have had the support of the majority shareholder, Devin Regional Investments.
Rising costs
In the past two years, the Airport Company has revisited the proposals and with assistance from the Council has undertaken detailed design work in consultation with the Irish Aviation
Authority. The result is that the costs for an extended runway have now escalated to €27m and the majority shareholder has made a proposal that Devin Regional Investments,
which is now a partnership between the Bolster and Comer Groups, will invest €12m in the company to facilitate the extension of the runway.
This is subject to matching Government investment of €12m along with €3m from the local authorities.
Under proposals brought forward at today's meeting, Waterford City and County Council will transfer lands owned by it at the airport to the airport company at nominal cost only if and after the extended runway has been completed and has received IAA accreditation.
The local authorities will receive 18% of the share capital of the airport company, with the investors receiving 80% and existing shareholders receiving 2% subject to the agreement of an EGM of the company. There is, however, a buy back option for the investors over a six year period for the local authority shareholding on a reducing scale to nominal cost if the airport is run successfully for that period as a going concern.
The investors will have the option to buy back the local authority shares over a six year period on a sliding scale subject to successful operation of the airport as a going concern.
On execution of contract, the investors will invest €2m in the company, from which a maximum of €1.7m will be paid to Waterford City and County Council to cover the costs of land and property purchase through the CPO process or by negotiation.
The proposed contribution from the local authorities is €3 million, with €2.2 million from Waterford and €400,000 from each of Kilkenny and Wexford.
Council involvement
"The simple reality is that there are significant risks in achieving a return on investment and there needs to be a significant scale of passenger numbers generated to achieve any yield of consequence", Mr. Walsh told the meeting.
"I'd prefer if we weren't involved with the airport, because it brings with it responsibilities, and otherwise, that we have very little control over, and very little knowledge of", he continued.
"One of the concerns I have about our involvement in the airport, is that we don't bring the competencies to it that you'd ordinarily expect. We're good at certain things, all of us, but in terms of the competencies around the aviation, the knowledge of the marketplace, engagement with airlines, all that type of stuff, we're a little bit looking into the jet engine, if I'm honest."
Political input
"The reality is that government decision is probably fragile, I'm not going to put it any better than that, in the sense that it's being tested up and down every avenue in terms of the business case, the modelling, every other thing, and that's understandable. There's a nervousness around spending public money in this environment and that's understandable, yet it's a very unique opportunity that in principle was decided in 2019 by the previous grant aid, and all that has happened is there's an increase in cost, but ultimately it's probably a political decision that'll have to be made, and the reality is anything we do is conditional on that, and indeed conditional on an EGM of the shareholders, but I'm asking for permission to enter into contract."
The development proposal was unanimously adopted by representatives, being proposed and seconded by current Waterford Airport board members - Cllr. Jim Griffin (Sinn Fein) and Cllr. Jody Power (Green Party).
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