Issue - meetings

Report of the Leader TO FOLLOW

The Cabinet Member Finance and Assets introduced the report and explained that this had been a long and complex process. He emphasised that as joint shareholder in the airport with Gloucester City, the council has made significant effort in supporting the company.

The proposal was for a further £15.5 m investment, split between the two councils, to ensure the company had a sustainable future. The current issue with the runway had been identified as a result of work undertaken to date. He explained that the main runway required full replacement as, whilst currently still operational, it had potential to cause a problem in the immediate future. The second runway was not currently in use, as it required repair but at a modest cost. The third runway, which ran north to south, required a temporary repair. If the investment was supported and the two runways were upgraded the third runway would be shut on a permanent basis to facilitate future development.

The Cabinet Member reported that detailed work on the runway had been undertaken by the consultant but the exact cost would be determined by the procurement process.

It was noted that Gloucester City Council would be considering the same proposals next week. The Cabinet Member wished to highlight that while most of the previously agreed loan of £14.5m had not yet been taken up, it was recognised that the councils could not continue to increase support for the company. To that end alternative options had been considered and the proposal before Members comprised a “swap”-for the shareholder councils to provide the money for the runway upgrade in exchange for Meteor Business Park which would provide £650k rental income to the councils.

When considering whether the company would remain viable after the swap the Cabinet Member stated that the councils did receive a commercial return from the company on the loans and councils had taken 5% of rental income from property rents. He confirmed that the Airport company were of the view that they would remain viable due partly to their original investment programme which would generate extra income.

He highlighted that the LEP had extended a grant of £1.88 m to facilitate that investment opportunity and this was clearly something the airport company wished to take advantage of urgently.

The potential financial risk to the shareholders if the option of permanently closing the airport was taken up was outlined in the report although this option would then free up the asset in the long term.  There was however an economic value of having an airport, particularly in light of the golden valley and cyber park developments.  The GVA was over £ 50 million per annum.

He also added that once the runway situation has been resolved then the ownership of the company would be reviewed.

He emphasised that the company had continued to operate and he wished to pay tribute to Peter Hibberd who had made a significant contribution to its work.

He then outlined the recommendations to Members.

The  ...  view the full minutes text for item 20