Aer Lingus to reveal €800m airport site plan

The Aer Lingus board will discuss plans for an €800 million redevelopment of its 14½-acre site at Dublin Airport at a meeting…

The Aer Lingus board will discuss plans for an €800 million redevelopment of its 14½-acre site at Dublin Airport at a meeting next Thursday.

In anticipation of a positive response from the directors, the airline is ready to move immediately to seek planning permission from Fingal County Council.

Included in the plans are proposals for two hotels, office blocks and a conference centre on a site facing the airport terminal that is currently occupied by the Aer Lingus head office.

This building would be knocked down as part of the plans and Aer Lingus would need alternative office accommodation within the airport complex before the site becomes available.

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Also included will be space for an underground station, even though no decision has yet been taken by the Government on construction of a Metro service between the airport and central Dublin.

The scheme embraces 160,000 sq m. It includes multi-storey car parks for 6,600 cars, a 400-room five-star hotel, a 300-room four-star hotel, an aparthotel, a leisure centre and airport-related retail space.

An Aer Lingus spokeswoman said only that "no decision has been made on whether the airline will apply for planning permission".

However, separate sources indicated that the directors are scheduled to receive a "presentation on Dublin airport development" at the meeting.

Preparations within the organisation for a planning application are well advanced.

Aer Lingus is being advised by the project management firm 4 Front and the architectural firm Henry J Lyons & Partners, whose designs for the development have appeared on the architecture website, archiseek.com.

The airline has control of the airport site under the terms of a 65-year lease from the former Aer Rianta, now the Dublin Airport Authority (DAA). It also has an option to renew this lease for another 30 years.

Fingal could take up to 18 months to sanction the plans, although some airline sources believe that officials in the council are well-disposed to the initiative.

The attitude of the Dublin Airport Authority to the proposed development is not yet known. Its stance may be influenced by the inclusion of hotels in the Aer Lingus plans. The DAA owns the Great Southern Hotel in the airport, one of the few bright spots in the State-owned hotel group, and its business might suffer if competition emerges. Informed sources in Aer Lingus believe the property plan presents obvious opportunities to realise significant profits for the cash-strapped airline. With part-privatisation again on the agenda, if only after the next general election, some sources believe the directors are likely to push ahead quickly with any plan that would increase the company's net value.

It is not yet clear how Aer Lingus will pay for the project. One funding option is to co-develop the site with a property development group. The airline would issue a tender under EU procurement rules in this scenario.

Such a partner would put forward most of the money for the development but share the profits with Aer Lingus on the basis that the airline provides the site.

Another option for the airline is to withdraw from the project altogether by selling on its interest in the site, or part of its interest, once planning permission is granted. Some informed sources estimate that the site with full planning could be worth €145-€217.5 million at a price of €10-€15 million per acre.

A further option is to enter a leaseback agreement with the DAA, which would, in turn, develop the site.

However, the authority's high level of debt and its requirement for money to fund a new airport terminal suggests that this is less likely.