The 10 Greater Manchester councils that own a majority stake in Manchester Airports Group could be set to provide a £260 million finance package to help the group amid growing fears for its future amid the Covid-19 crisis, according to a report in the Manchester Evening News.
Manchester Airports Group (MAG) is privately managed on behalf of its shareholders — Australian investment fund IFM Investors (35.5%), Manchester City Council (35.5%) and nine other Greater Manchester councils (29%).
MAG is the operator of Manchester, London Stansted and East Midlands airports.
Sources said the councils had no choice but to protect their asset, which has paid them massive dividends in recent years — MAG has paid almost £600 million in cash distributions to the councils over the past five years.
Manchester City Council leader Richard Leese said: “The council’s share in the ownership of Manchester Airports Group (MAG) is also a major generator of income for the council which is used to help fund vital council services.
“Together with the other shareholders in the airport — including the other nine Greater Manchester local authorities — we are investing to support MAG, each in proportion to its shareholding.
“Backing the airport will enable it to weather the current storm and come out stronger in the years ahead, ensuring that these benefits for Manchester people and businesses continue in the long term.
“To put this in context, the MAG dividend paid to Manchester city council for the last financial year alone was £70m.
“Failure to act to support the group now would cost the council and the city as a whole much more in the longer term.
“We have taken advice from aviation industry experts and our careful assessment is that this extra investment stacks up, even allowing for more pessimistic scenarios.
“Our return on this investment to support MAG’s future will more than cover our costs, but it should be stressed that it is being made to support the economic growth and regeneration of the city rather than for commercial yield.”
A MAG spokesman said: “The coronavirus pandemic has had an unprecedented impact on the aviation industry, and economy as a whole.
“MAG is well positioned to deal with these challenges and has acted quickly to protect jobs, safeguard the business for the long term and ensure its airports are well placed to contribute to a full and balanced recovery for the UK economy.
“As part of MAG’s response, we have instigated a range of measures to preserve cash and limit the impact of significantly reduced passenger volumes.
“These include reducing costs, delaying non-essential capital expenditure and, as is common when businesses encounter such circumstances, talking to our shareholders about the appropriate balance of equity funding.
“Taken together, these steps will put MAG in a strong position to respond positively to a recovery in air travel, which in turn will deliver wide-ranging economic benefits to the communities and regions that our airports serve.
“MAG has successfully increased traffic volumes every year for the last 10 years, supporting jobs and growth across the North, the Midlands and the East of England, as well as returning almost £600m in cash distributions to the Greater Manchester councils over the past five years.
“We look forward to getting back on track with our ambitious growth plans and helping to restart the UK’s regional economies as soon as possible.”