Dublin Airport Authority orders due diligence report

The Dublin Airport Authority, which replaced Aer Rianta in September, has ordered due diligence to be undertaken on all parts of its business.

The work is being carried out by consultants PricewaterhouseCoopers (PwC) and a report is expected to be passed to the authority's board in the near future.

The authority has denied that PwC's work is a precursor to a sale of certain assets. A spokesman said it was about giving a new board the most up-to-date data on the assets and liabilities of the company.

It is understood the profitability of each business unit will be known by the end of the process.

Due diligence is normally done before one company purchases the shares of another. In this case, the new directors want a fresh assessment of the firm's financial strengths and weaknesses. Some of the directors are relatively new to the aviation sector.

Aer Rianta was dissolved on September 1st and its chairman, Mr Noel Hanlon, finished his term of office shortly before that. The Government's controversial State Airports Act set up a new structure for the airport. Eventually, Shannon and Cork airports will be independent of the Dublin Airport Authority, but this can only happen if permission is granted by the Ministers for Transport and Finance.

Among the subsidiaries subject to due diligence is Aer Rianta International (ARI), the Shannon-based holding company that manages several international investments on behalf of the authority, including stakes in Birmingham and Düsseldorf airports.

The ultimate ownership of this division has been the subject of speculation for some time. The last Minister for Transport, Mr Séamus Brennan, suggested its assets might be passed to Dublin Airport, but no preparation has been done on this. The ultimate ownership structure for the Great Southern Hotel chain is also unknown.

ARI's contribution to Aer Rianta (now Dublin Airport authority) decreased from €13.2 million in 2002 to €5.1 million in 2003. The principal cause of the decrease was Düsseldorf International Airport, where Aer Rianta's share of losses amounted to €7.45 million.

Under chairman Mr Gary McGann, the Dublin Airport Authority will have to assume the considerable debts of Shannon and Cork in the next few years. Some observers have expressed concern that this arrangement may inhibit the growth of Dublin Airport.

Unions have also expressed concern that the Dublin Airport Authority will institute a major cost-cutting programme in 2005. Shannon Airport is also expected to face the issue of staffing requirements during 2005.