Airports group DAA borrows €500m as passenger numbers plunge
Funding gives group liquidity as it struggles with fallout from Covid-19 pandemic
State airports company DAA is borrowing €500 million through a bond issue to provide the group with long-term cash.
DAA, responsible for Cork and Dublin airports, recently confirmed that total passenger numbers are set to tumble to nine million this year from 35.5 million in 2019 as it grapples with the impact of Covid-19 on world air travel.
The State company cashed in on historically low borrowing charges this week, selling €500 million in debt at an interest rate of 1.6 per cent and due for repayment in 2032.
Ray Gray, DAA’s chief financial officer, said the transaction would provide “long-term liquidity to the group”. Reports say that demand for the bonds reached €1.9 billion, meaning the offering was close to three times oversubscribed.
DAA signalled before the pandemic struck that it could raise cash from the bond markets to help fund various activities. It borrowed €350 million from the European Investment Bank last year, which is repayable over 20 years.
Earlier this month, DAA extended an existing €450 million credit facility from March 2025 to March 2026 in an agreement that involved all members of its existing banking syndicate.
The airports company last went to the bond markets in 2016, when it raised €400 million at 1.554 per cent per annum with a repayment date in 2028. DAA used the cash to replace existing debt carrying higher interest rates.
The company’s debt increased to about €700 million by the end of September from €450 million at the beginning of this year. The increase was mainly down to €200 million in capital investment over those nine months, according to a DAA statement.
Dalton Philips, DAA’s chief executive, told the Oireachtas Joint Committee on Transport and Communications Networks this week that the group was likely to lose €200 million following the devastating impact of Covid travel restrictions on aviation.
DAA has cut one-third of its costs through a reduced working week, voluntary severance and pay and hiring freezes, among other measures.
Mr Philips urged the Government to adopt a new EUsystem for safe air travel and to endorse rapid screening for passengers.