Mysteries are emerging in connection with the finances of London Luton Airport Operations Ltd (LLAOL). The financial background is complex, but here is a brief explanation.
London Luton Airport Operations Ltd (LLAOL) is the operator of Luton Airport under a concession agreement with the owner, Luton Rising/Luton Borough Council (LR/LBC).
LLAOL is a joint enterprise between AENA, the national airport operator of Spain, which is owned by the Spanish Government, which holds 51% of shares.
The remaining 49% was owned by AMP Capital, an Australian investment bank. We say was, as whilst we were involved in the Development Consent Order (DCO) process last year, we missed the announcement that those AMP shares had been purchased by an American company called Infrabridge, which is a division of a company called Digitalbridge
Are you still with us? Hope so, because it is about to get more complicated!
Digitalbridge brought out the AMP Capital assets in February 2023, and as such took over the role as the investor for development projects at Luton Airport, but did they?
In a previous article we informed you that an £8 million development of catering facilities within the airport departure lounge, was being 50/50 funded by the operator of the unit, and LR. We questioned why LLAOL was not stumping up the cash, as development costs fell to them under the operating concession.
Was the reason that this new shareholder did not feel the upgrade was value for money, and refused? We all know that LR throw the money they borrow from LBC around on an array of projects, as getting a return is irrelevant, as they will just write it off like the huge DART link losses.
Is LR still expecting LLAOL to pay for/contribute to, the Phase 1 plan for growth under their DCO plans?
If the new money men baulk at £4 million for a food court upgrade, what hope is there that they’ll sign up for the DCO estimated £350 million base line Phase 1 costs?
This Phase consists of a very modest expansion of the existing terminal building, additional aircraft parking aprons, and – despite supposedly discouraging passenger to arrive by car – more car parking. We must also remember however, that LR stated at the DCO hearings, that they would be prepared to fund Phase 1, by increasing their borrowing stream from LBC.
In other news, it was recently reported, that the other half of LLAOL, AENA, would appear to have had their share holding cut by the UK courts this month.
There are several articles on line for this event, but they are written for the finance/investment industries, and as we do not have any expertise in that area, we share the following link, and our best efforts at a simple explanation?
It appears that the UK Courts have awarded NextEra Energy, an American renewable energy developer, the dividends and income on 26.1% of the 51% of shares AENA hold in Luton Airport.
NextEra took the Spanish Government to court over 290 million Euro in compensation, for loss of profitability on its investment in two solar thermal plants in Spain, as a result of Government reforms in 2013.
We assume that if the Spanish Government repays this compensation, then these shares/dividends simply revert back to AENA? In the meantime, whilst NextEra hold the shares, they will receive any profits that accrue.
This means the current make up of ownership of LLAOL, for the first time we believe, now involves three groups: – Digitalbridge 49%, NextEra 26.1% and AENA 24.9%.
We did have a wry smile at the irony of a renewables company working to decarbonise the planet, now being, if only temporary, the second biggest shareholder in Luton Airport.
It is also worth noting that according to its latest accounts, the Airport Operator made a profit of £82.6m and paid a dividend to ‘all’ its foreign shareholders. Meanwhile Luton Rising, owned by Luton Bough Council, made a loss of £209.8m and once again paid no dividend to the provision of services within Luton.