Loss of over £232m revealed in latest accounts for Luton Borough Council’s airport company

A loss of £232.1m for 2021/22 is revealed in the accounts for Luton Borough Council’s airport company, up from £109.7m the year before and from £3.3m two years earlier.

The latest financial outlook for London Luton Airport Limited (LLAL), trading as Luton Rising, has been listed on the Companies House website.

LLAL’s net assets fell to £863m to from £1.095bn driven by the downwards revaluation of the airport asset. Its operating loss was lower from £137m in 2020/21 to £133m in 2021/22.

Passenger figures recovered to 6.2m for the year until March 31st 2022, up from 2.9m in 2020/21. That year no concession fee was paid by the airport operator London Luton Airport Operations Limited (LLAOL).

But £21m or £3.36 per passenger was paid in 2021/22, which continues to be LLAL’s main source of income.

The pandemic led to the activation of a special force majeure, according to a strategic report for the year ending March 31st 2022.

A £45m force majeure settlement was agreed payable by LLAL to the airport operator in phases over a three-year period, said the report.

As well as airport assets, the company owns the passenger rail shuttle Luton direct air rail transit (DART) network, which connects Luton Airport Parkway railway station to London Luton Airport.

Charitable donations made by LLAL to local causes were £9.1m in 2019/20. When the company had no concession income a year later, these donations were £8.3m before falling again to £7.4m in 2021/22, having peaked at £14.8m in 2015/16.

Pressure group Stop Luton Airport Expansion (SLAE) said: “It’s no coincidence that it was at that time the borough council decided to realign its airport company from a simple rent collecting firm to an airport developer, and donations fell.

“Losses have grown, charitable donations have fallen and a new way of giving those donations is currently being devised.

“Dividend payments by the airport company to the local authority have been suspended for the immediate future, as these losses need to be stemmed.

“The accounts show a loss of £232.1m for 2021/22, up from £109.7m in 2020/21, and £3.3 million in 2019/20.

“Debts of £345.1m have been racked up over three years, predominantly on the construction of Luton DART and the development consent order (DCO) for airport expansion.

“The report includes details of the stabilisation loans provided to LLAL/Luton Rising by the council to keep its airport company solvent.

“Will the council keep borrowing and lending, or will it mean an eventual airport fire sale to whoever offers the best deal?”

The accounts also reveal another difference in the valuation of the airport between the auditors, Azets Audit Services, and LLAL/Luton Rising.

Audit firms Ernst Young LLP and PricewaterhouseCoopers UK have also found a discrepancy between their calculations and those of the airport company and council finance team.

The LBC/Luton Rising figure of around £1.4bn as of March 2022 was reached with valuation advisers Deloitte LLP.

Azets Audit Services’ valuation is £1.021bn as of March 31st 2021, and £1.06bn 12 months later.

The airport is operated by a private company LLAOL, entirely separate to LLAL, under the concession agreement.