Cost of Cork Airport's new terminal may soar

ONE MORE THING:PETER CASSELLS'S report this week on how Cork Airport's debt should be divvied up with the Dublin Airport Authority (DAA) in advance of separation was both confusing and illuminating.

According to Cassells, the Cork Airport Authority (CAA) concluded that it would require an ear-popping €150 million in capital investment in the coming years.

This included €60 million to raise the capacity of its new terminal up to five million a year by 2013.

We wouldn't be surprised if Cassells needed smelling salts on communication of that piece of news. Let's not forget that Cork has already been the beneficiary of an eye-watering €180 million outlay by the DAA on its shiny new terminal and associated facilities.

This fine new building, we were led to believe, could cater for up to five million passengers a year. So why does it need to spend yet more millions? Especially when the old terminal facility could presumably be dusted off for a modest sum.

In fact, Ryanair boss Michael O'Leary has offered to do just that in return for exclusive use of the old building. Remarkably, the conclusions reached by the CAA and its consultants on what level of debt it could assume (€50- €60 million) were based on a decline in passenger numbers on routes to Dublin and London over the next 10 years.

Cork doesn't provide details on route information, but we can only imagine that Dublin and London are two of its best routes.

If these jewels are going to be tarnished over the next decade, why does the CAA need to spend €60 million boosting the capacity of its terminal?

Cassells's report suggests that Cork Airport is flying high. Passenger numbers are forecast to hit 3.4 million in 2008, "almost 10 per cent ahead of projections". Its earnings before interest, tax, depreciation and amortisation (ebitda), at €14 million, are "13 per cent ahead of projections".

Happy days.

Cassells concluded that this level of ebitda would allow Cork to carry a debt of more than €100 million, which is effectively what he has done by suggesting the reassignment of Cork's €113 million European Investment Bank loan from the DAA to the CAA. Cassells proposes giving Cork up to €70 million in property and investment assets and a payment from the DAA of up to €10 million for pensions.

The ball is now in Minister for Transport Noel Dempsey's court. His response on Wednesday to the report fudged the issue and gave little insight as to his next move. He should tell Cork to like it or lump it.