Council agrees on £119million rescue package to bail out its Luton Airport company
A multi-million pound rescue package has been agreed in private by Luton Borough Council's executive to bail out its stricken airport company.
London Luton Airport Limited (LLAL) has been badly affected during the pandemic because of its impact on the aviation industry.
Councillors agreed an investment totalling £119m plus a contingency of £20m, to help stabilise LLAL, as well as providing extra capital investment, according to a council spokeswoman.
"The sums are repayable, will come at no net cost to the Luton taxpayer and will have no negative impact on council tax, services or the council’s reserves," she said.
"The money is being borrowed by the council on behalf of LLAL and isn't finance we could otherwise use to fund our regular services."
The decision was taken during the private section of an executive committee meeting last night (Monday).
"Councillors heard how the future prosperity of the town for generations to come was at stake, unless action was taken," added the spokeswoman.
"There's confidence that demand for aviation will return, as people can once again visit their friends and families living abroad and to take well-deserved holidays, and the loans can be settled from future airport revenues."
Labour High Town councillor Andy Malcolm, said after the meeting: “We had no choice but to hear the item about financial support to LLAL in private because of commercial sensitivities. There are many jobs at stake here.
“But I'm keen the people of Luton understand what has been agreed and why because these are large sums of money.
“Coronavirus has very sadly had devastating impacts on communities across the world, and Luton is no different.
“It's our duty as councillors to ensure our town recovers in the best way possible.
“The airport has been our biggest success story over the last two decades, providing financial support for front line services, countless partners in the community and the charity sector.
"Agreeing these funds will ensure that’s the case for the next 20 years and beyond," explained councillor Malcolm, who's the portfolio holder for finance.
“Throughout this process I've been very conscious of how future generations will feel we reacted to this challenge.
“Without agreeing these loans, the council would be left with little choice but to sell its most valuable asset at a time when it couldn’t achieve a fair, let alone optimum, price.
“A number of airlines and airports across the UK, including Heathrow, Gatwick and Manchester, have had to increase borrowing significantly in order to navigate the impacts of the pandemic.”
The details were also discussed in private at a scrutiny finance review group meeting on Thursday. (June 24th)
Liberal Democrat opposition councillors demanded that local taxpayers should be allowed to know how much of their money is involved, why this is necessary and how the money would be repaid.
“We understand that where delicate and complex negotiations are still going on there's a need for confidentiality,” said Liberal Democrat group leader and Barnfield councillor David Franks.
“But eventually taxpayers are going to have to foot the bill.
“It's also widely known the company’s and the council’s auditors have yet to sign off accounts for periods ending March 2019 and March 2020 so it's pretty obvious the financial position is serious.
“Our view is that taxpayers are entitled to know what their money is being spent on and why."
London Luton Airport is operated by a private company, entirely separate to LLAL, under a concession agreement.