Great Southern losses 'unsustainable'

The continuing losses at the Great Southern Hotel chain are to be examined by the group's local board, although a closure plan will not be implemented in the short term.

Last night the Dublin Airport Authority (DAA) described the hotel's losses as "unsustainable" and said the group's local board needed to "urgently address" the issue. The DAA denied it was abdicating its responsibilities.

The DAA is the ultimate owner of the hotel chain, although the group has its own board of directors. Declan Collier, chief executive of the DAA, sits on both boards. The local board is effectively presented with two choices: a limited disposal plan or the full sale of all nine properties. If a partial sale plans goes ahead, the two properties most likely to be sold are the Galway Corrib and the Rosslare hotel.

Most observers believe some action will have to be taken as the chain will shortly run out of cash. Losses for 2005 are going to come to at least €3.5 million.

The board of the DAA met yesterday, but it is unclear how much time was devoted to the subject. It is understood the DAA has still not made a decision on whether it will provide further financial support. A spokesman said last night the proceedings of the board were confidential.

It is understood there was some discussion concerning potential overruns on the terminal at Cork airport, however.

The main contractor Rohcon is expected to present an updated estimate of its costs next year. This may increase the budget for the terminal significantly beyond the original €165 million.

However, Rohcon last night declined to comment on what it might ultimately submit. It said it did not comment on dealings with clients. Some additional expenditure on the roof of the terminal is expected. The chairman of the Cork Airport Authority, Joe Gantly, told The Irish Times last night he was not aware of overruns and the terminal would still open on schedule.

The other pressing issue is where Cork airport's debts will end up. The previous minister for transport, Séamus Brennan, favoured these being passed to Dublin airport, but the current Minister, Martin Cullen, has yet to decide on the issue. Dublin airport already has a significant debt profile and is believed to be reluctant to exacerbate this situation.

It is likely to spend €250 million on a new terminal and it is also facing a potential pension deficit over the next few years. Ratings agency Standards & Poor's is expected to review its credit rating. This could lead to its borrowings becoming more expensive.