Cork airport may end up having to take responsibility for less than €100 million of the cost of its new terminal, following compromise signals last night from Taoiseach Bertie Ahern. Mark Hennessy, Political Correspondent, reports.
During a difficult day in Cork, he was repeatedly questioned about the controversial issue, given the Government's promise in 2004 that the airport would be debt-free once made independent of the Dublin Airport Authority (DAA).
The Cork Airport Authority, which was warned by Mr Ahern a month ago that it would have to take responsibility for €100 million of the debt or else stay under the DAA's control, has strongly opposed the proposal.
Under the 2004 State Airports Act, Dublin, Cork and Shannon airports are to be set up as independently run State-owned businesses, once business plans for all three have been drawn up and agreed with the Government.
The Cork airport board has said it will consider seeking a report from consultants on its ability to pay off €100 million in debt in a bid to secure major concessions from the DAA.
In an apparent signal of compromise, Mr Ahern said: "As soon as the study that the board has commissioned yesterday is done, we should then resume to see what debt Cork can take.
"If Cork, of course, can't take any debt then of course it will delay the independence. If Cork can take a debt, then they'll, of course, negotiate," he told reporters.
He had insisted during earlier questioning which left him visibly annoyed that he welcomed Cork Airport Authority's decision, although he added that it wanted extra information from its Dublin parent.
The Government had wanted the DAA to take its predecessor Aer Rianta's entire outstanding debt, until it realised that this would breach company law by leaving the company with a scale of debt that it could not realistically pay off.
The Dublin Airport Authority is expected to have about €1 billion debt of its own by 2010, after it borrows €395 million to build a new terminal in Dublin by 2009, and other infrastructural changes.
Meanwhile, the DAA, which is still in command of Cork airport until the split is finalised, is likely to postpone plans to agree a joint venture with private companies for 30 acres of land at Cork.
The decision to seek "expressions of interest" from possible partners was taken without any contact with the Cork board, chaired by businessman Joe Gantly, the DAA accepted last night.
An unpublished report commissioned by the DAA on Cork's financial health, carried out by BDO Xavier Simpson/ PricewaterhouseCoopers, argued that it could bear the weight of a €100 million debt.
Perhaps significantly, the maximum debt that the Cork Airport Authority is entitled to borrow under the State Airports Act 2004 is €100 million, though the Government could, of course, increase the borrowing limit.
"Effectively, this would mean that Cork would not be able to borrow another penny for years to come," the Progressive Democrats' Cork-based Senator, John Minihan, argued yesterday.
However, the Progressive Democrats leader Michael McDowell has denied that the Government is split on the issue, which did not come to the Cabinet for final approval.
His party, he said, wanted Cork airport to be independent and to "be in a position to compete economically without being saddled with a debt that would make it uneconomic.
"And as I understand it, that's the desire of both parties in Government, and I understand the Taoiseach has today welcomed the appointment of consultants to the Cork airport Authority," he said.
In Limerick, Fine Gael leader Enda Kenny said the former minister for transport Séamus Brennan had promised in 2003 that Cork would be debt-free and the Government is "not standing by its word".
"A letter was written on behalf of the Government by a minister clearly stating that both Cork and Shannon would be free of debt once the break-up from the centralised system took place.
"The Government have not honoured their commitment and have broken another promise," he said.