Accounts filed with Companies House reveal pre-tax losses rose to £8.9 million in the year to March compared with £4.6 million in the previous year. This includes £4.5 million of exceptional charges due to the devaluation of “fixed assets” such as buildings and land. Meanwhile, the size of the taxpayer bailout rose from £4.5m to £10.8m.
The Scottish Government admitted that “additional loan funding” beyond that already budgeted could be necessary to keep the airport functioning.
The directors of the airport, which was rescued by the Scottish Government in 2013 for just £1 after owners Infratil failed to find a commercial buyer, admitted it had been “another challenging year”.
They also warned that income from passenger volume – the biggest driver of revenue – would suffer further in the next financial year as the effects are felt of Ryanair’s decision last October to transfer some of its operations from Prestwick to its new Glasgow Airport hub.
The airport has written off the value of its assets by £4m, the report from TS Prestwick Holdco Limited revealed. The company set up to acquire the airport on behalf of Scottish ministers. Professional services firm Deloitte, which was engaged to provide an external valuation of the assets, have devalued them by a further £500,000.
Underlying losses – which strip out the effects of interest payments on loans and taxes as well as any one-off write downs in the year and give a measure of the trading performance of a company – also rose to £4.1 million, up from £3.9 million the previous year.
Opposition politicians who have long questioned First Minister Nicola Sturgeon’s decision to take on the facility described the figures as “a worry”.
Scottish Conservative transport spokesman Alex Johnstone said: “These latest figures are certainly a worry and a massive blow for Scotland’s transport, business, infrastructure and tourism industries. As one of Scotland’s busiest airports, Prestwick should be thriving, not operating at a loss.
“When it was announced that the airport was to be publicly owned, we issued a warning at the time, stating that it would take an enormous effort to get the airport back into profit.”
He added: “The Scottish Government needed to have the courage to do what was necessary, rather than simply pouring money into something without accruing any benefit.”
Yesterday’s report insisted that there were signs of growth for Prestwick in areas such as freight, military activity and property. It also claimed possible changes to air passenger duty tax could benefit Prestwick, and that the airport’s ability to adapt quickly to changes in the weather often enabled it to take aircraft diverted from elsewhere.
The prospect of the loans being fully paid back will depend on new developments which may include the airport securing UK spaceport status, a fall in air passenger duty which is due to be devolved to Holyrood, or by becoming a hub for emergency disaster relief programmes, as well as training pilots and engineers.
Prestwick is one of three Scottish locations currently being considered for the UK’s first spaceport, which is due to be established by 2018.
Chief executive Iain Cochrane said: “Following another challenging year, the airport continues to work to turn around the financial performance and there are promising signs in a number of areas, though growing the passenger business remains a challenge whilst air passenger duty exists at its current level.
“The airport is a frontrunner in the process to become the first designated UK spaceport and is continually looking for opportunities to maximise both income and the broad scope and opportunity offered as a strategic national asset.”