In a recent article we highlighted our concerns about how the funding of its airport company London Luton Airport Ltd (LLAL), by Luton Borough Council (LBC), could lead to that company becoming a Zombie company – one that cannot grow because it spends too much money servicing its debts. In the agenda pack for the Executive Committee meeting of LBC on the 20th January, the following statements show us that this is happening at this very moment. A link to the full agenda is at the end of this article.
“LLAL was created because a government direction under the terms of the Airports Act 1986 prevented the Council from continuing to be the freehold owner of the airport land. Therefore, should LLAL’s financial position deteriorate to the point where it could no longer be a going concern, it does not appear that the Council could buy back the ownership of the airport land. A forced sale of assets would have significant implications for the Council and it is important for the Council to work with LLAL in order to ensure LLAL is a going concern and at the same time any support provided are affordable and sustainable from the Council’s view point”
This is the most damning indictment of the incompetence of LBC in their reckless chase for airport expansion. It would appear they have not known, or have willingly ignored the fact, that they have no legal recourse to the only asset their wholly owned company has, in the event of that company not being able to meet its liabilities.
Which means that the airport itself would have to be sold off in a fire sale, and that they as the only creditor of LLAL, may get back a fraction of what they have loaned their company, and lose all future earnings from concession income, as the airport would now no longer be an asset for Luton.
This alone shows that vast sums of money will still, and for the foreseeable future, have to be borrowed, and plundered from council services, to keep the zombie company LBC have created afloat, as they literally have no other choice. It was LBC who willingly made the choice to turn LLAL from a rent collector, to an airport developer. Those accountable must be publicly named and asked to explain the rationale for such reckless behaviour.
“Luton airport planning conditions limit capacity to 18million commercial passengers and this capacity was reached in December 2019. LLAL is consulting as part of process to obtain a Development Consent Order to increase the passenger numbers to 32m. It is worth noting that over the next few years much of the additional income generated by LLAL will be utilised to service the high level of borrowings to fund the DART, the application for a Development Control Order, the stabilisation and recovery plan in line with the Vision for Growth, and other projects
Dividend form LLAL has been removed in the Medium Term Financial Plan so that the airport company can meet its financial commitments.”
So no matter how quickly the airport recovers, if at all, residents will see no benefit. Vital income will still be diverted to a DART link which is not necessary as an adequate free service has been good enough when passenger figures have doubled, and the chasing of a piece of paper that could actually mean nothing at all if Central Government decide against any airport expansions to meet climate change targets. What exactly does “next few years” actually mean?
As always the reports on LLAL were discussed in private, so the public cannot see exactly how big a mess has been created.
Time for honesty and openness – Stop Luton Airport Expansion