Birmingham Airport will receive an emergency loan worth up to £18.5 million from the city council as the travel industry continues to suffer under the coronavirus lockdown.
The local authority has agreed to the funding support following what it called the most severe downturn in the airport’s history.
The seven councils of the West Midlands county own a 49 per cent stake in the airport, a further 48.25 per cent is owned by the Ontario Teachers’ Pension Plan and the remaining 2.75 per cent belongs to an employee trust.
Passenger volumes between April and December were down by 91 per cent, according to the airport.
Birmingham City Council’s cabinet approved its contribution at its meeting this week but opposition councillors have expressed concerns that even more funding might be required further down the line.
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The meeting heard that all seven of the West Midlands councils were approached to make a contribution with three others and the pension plan also agreeing to do so.
Cllr Meirion Jenkins (Con) said: “I see that we are having to provide a loan to maintain liquidity and we perhaps have no choice about that because, if we don’t and they become insolvent, we could lose more.
“How much analysis has been done in terms of whether this is going to be sufficient?
“Whatever we think about covid and how it has been handled and strategy, I think one thing we can perhaps all agree on is it has taken us all a bit by surprise in terms of the duration and severity which has hit the UK.
“Right now, looking at the prospects for air travel, I really don’t know what the future holds. If we put this money in, how confident are we that more won’t be required?
“Because the impact on tourism travel and business travel might be worse than even we think it is going to be.”
In response, Birmingham City Council leader Cllr Ian Ward said: “The risk here if we don’t put this loan in and ensure the liquidity of the airport is that we would lose control of the airport as seven metropolitan authorities.
“I think it is in the interests of all of the West Midlands authorities and the people across the West Midlands that we do continue to exercise influence over the airport.
“We would not want to see anything happen to the airport that was to the detriment of the economy and it is a significant contributor to the economy.
“The airport itself has taken a conservative approach to the return of numbers flying so I think we can be reasonably confident this is a number that we will not have to revisit.
“Having said that, we don’t know with any certainty what will happen with the pandemic so there is always a possibility that this sum of money will not be sufficient. But we have taken all of the expert advice around that.”
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Birmingham Airport said in a statement: “The pandemic has led to Birmingham Airport’s most severe downturn in its history, with passenger volumes in April to December last year resulting in a 91 per cent decline.
“To limit the impact of significantly reduced passenger numbers, there have been a range of measures the airport has taken to preserve cash and manage costs, including limiting spending, suspending capital projects and maximising the use of the Job Retention Scheme.
“These actions have been designed to protect the airport’s long-term interests and ensure it is well placed to respond to the recovery when passengers resume flying again.
“Any support is very much welcomed as the airport deals with the ongoing impact of covid-19 and rebuilds post-pandemic to support the region’s economic recovery and air transportation needs.”