Local authorities dig deep to offer airport £260m in support

Manchester Airport’s holding group is in line to receive up to £260m from its 10 shareholder councils to help it survive the coronavirus lockdown.

The 10 Greater Manchester councils, which all hold a stake in the UK’s third biggest airport, have agreed to the financial injection in the absence of any support package from the Government.

Earlier today (May 5) Greater Manchester Mayor Andy Burnham backed the support scheme during an online press conference, saying the councils are doing what any responsible shareholders would do, and protecting their investment.

Between them, the councils hold a stake of almost 65% in Manchester Airports Group (MAG), which also controls Stansted and East Midlands Airports.

Manchester City Council is the biggest shareholder, with 35.5%, while the other councils collectively own 29%, with Australian investment group IFM Investors holding the remaining 35.5%.

Manchester City Council said: “Backing the airport will enable it to weather the current storm.”

City Council leader, Sir Richard Leese, added: “Manchester Airport is critically important to the future success of the city.

“It is both an international gateway for trade and travel and somewhere which creates and supports tens of thousands of jobs.

“Backing the airport will enable it to weather the current storm and come out stronger in the years ahead.”

He added: “To put this in context, the MAG dividend paid to Manchester City Council for the last financial year alone was £70m.”

“Our return on this investment to support MAG’s future will more than cover our costs.”

It is understood Manchester City Council will invest around £143m, with the other councils contributing £13m each.

Back in March, Manchester Airport announced it was closing two of its three terminals as a result of the dramatic collapse of the aviation sector, with airline fleets all around the world grounded.

An airport spokesman said: “Like all airports across the world, Manchester Airport has experienced a significant fall in passenger volumes as a result of the COVID-19 pandemic.

“Given this reduction in departing and arriving flights, and the likelihood traffic will decline further, we have taken the decision to work towards operating from a single terminal.”

Three days earlier, in a stock exchange announcement, MAG sought to offer reassurance on its financial health.

It said: “The implications of COVID-19 on the aviation industry are unprecedented.

“However, MAG faces this situation with a strong underlying financial position, including low leverage, £395m of available debt liquidity undrawn and no debt refinancings due until 2023.

“MAG, together with its shareholders, IFM Investors and the councils of Greater Manchester, will continue to monitor the situation as it evolves and to update MAG’s strategic response as necessary.”