Not Waving – But Drowning

Luton Rising – But the message from the accounts suggest more like Luton Sinking!

The accounts for London Luton Airport Ltd/Luton Rising (LR) for the year 2021/22 have finally been

listed on the Companies House website.

The 2021/22 financial year saw the beginning of the creep back by aviation from Covid-19, but as these  accounts show, LR has seen its losses continue, and substantially rise.

This has not stopped LR continuing to take every opportunity to shout to the world and the residents of Luton, how they are doing really well and everything in the garden is rosy, and that they will deliver the financial future of the town. Looking at these latest filed accounts, that future looks ever more at threat, due to growing debts. We perceive these debts as the result of the reckless redirection of company policy.

Passenger throughput for 2021/22 was 6.2 million, up from 2.9 million in 2020/21. In 2020/21, no Concession Fee was paid by the airport operator, but in 2021/22 £21 million was paid, £3.36 per passenger, which of course is good news. However, further reading paints a very different picture

Page 21 contains the Profit and Loss Accounts. These show a loss for 2021/22 of £232.1 million, up from £109.7 million in 2020/21, and £3.3 million in 2019/20.

Three years have seen debts of £345.1 million racked up predominantly on the construction of the DART and the LR Development Consent Order (DCO) for airport expansion.

Page 13 shows the charitable donations made by LR to a variety of local causes. It is regularly reported how essential these donations are and what a good job LR does. In 2019/20 donations were £9.1 million. In 2020/21, when LR had no concession income these donations were £8.3 million, and in 2021/22 they dropped to £7.4 million. It is worth noting that for the year 2015/16, charity donations peaked at £14.8 million.   It is no coincidence that it was this time also that LBC decided to realign LR from a simple rent collecting company, to a full-blown airport developer, and donations fell. LR also sponsors many of the activities in Luton, from the annual carnival and fireworks display to the recent event for Luton Town F.C. as they celebrated promotion to The Premier League. What else could they have supported without the drain of their losses?      

Losses have grown, charitable donations have fallen and as a result a new way of giving those donations are currently being devised. Dividend payments by LR to Luton Borough Council (LBC) have also been suspended for the immediate future, as these losses need to be stemmed.

Page 11 details the stabilisation loans provided to LR by LBC to keep LR a solvent going concern. LBC also have an agreement to provide LR with financial support until such time as LR’s income reaches a point at which it is sufficient on its own to cover the expenses of LR.

The Elephant in the Room, of course – bearing in mind the accruing losses of LR – is what exactly happens if income doesn’t become sufficient? Will LBC keep borrowing and lending, or will it mean an airport fire sale to whoever offers the best deal?  Either option would be a nightmare for the shareholders of the airport, the residents, as their dominant income stream for service budget income would disappear.

The final point we would like to share is found on Page 16, and once again concerns a difference in the valuation of the airport between the auditors, Azets Audit Services, and LR

This makes Azets the third auditor to disagree with that valuation; in previous articles we have detailed how both Ernst Young and Price Waterhouse Cooper have parted company with LR and LBC over that issue.

In England there is an old good luck saying, “thirds a charm”, meaning third time in attempting. something will be the lucky one. Obviously this has not worked for LR, as it would appear they have had no luck again getting an auditor to accept their valuation of £1.35 billion as of March 2022, and they appear not to accept the £1.06 billion valuation of Azets.

It is common knowledge that the LBC Plan A has always been to claim back all the debts of LR in 2032 when it appoints the next operating concessionaire for the airport. In fact it is and always has been the only plan since it decided to rebrand LR as an airport developer rather than the rent collector it was set up to be twenty-five years ago.

The thinking is the bigger the valuation, the bigger the carrot will be for investors; that is of course until those investors ask to handle that carrot and realise that it’s rotten from the inside out?

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