Prestwick Airport’s £52m debts ‘may not be repaid to Scottish Government until sale’

South Ayrshire site focusing on cargo and military flights – but expects Ryanair traffic to grow further

Debts of more than £50 million may not be repaid by Prestwick Airport to the Scottish Government until the site is sold, its chiefs have indicated to MSPs.

It came as airport chiefs revealed they were considering a new expression of interest, which was being put through an “early process of diligence”.

Chairman Forsyth Black said previous bids had been “very distracting” to management so were filtered to assess their viability. It emerged in September that a previous approach had been rejected for lacking credibility.

Prestwick Airport was bough by the Scottish Government for a nominal £1 in 2013 to save it from closure. (Photo by Robert Perry/Getty Images)

Loans of £43m to keep the South Ayrshire airport going after it was saved from closure by ministers ten years ago, plus interest of some £9m, remain outstanding.

The business’s latest accounts for the year to March show it made an operating profit for the fourth year, which increased to £2.1m. However, the airport said the surplus was needed to fund operations rather than start repaying the debt.

Scottish Government spent £2.5m trying to sell Prestwick Airport

Mr Black told the Scottish Parliament’s economy and fair work committee: "That loan and rolled-up interest would be payable on a liquidity event, which could be a sale, a restructure, a merger – something which releases cash to pay back, as an airport is a costly thing to run.

“The interest rolls up and is only paid at the end like a balloon payment [a lump sum paid at the end of a loan term]. That is a common structure that’s used in projects like this.

"The point is to protect the company’s day-to-day cash, so they can recover, rebuild their business with a view to paying the dividends and the money back later on when there’s that liquidity point when the cash is released to do so.”

Wellbeing economy secretary Neil Gray later told the committee: “We want to see a return of the loan as quickly as possible.”

He restated his wish to return the airport to the private sector, but said it would not be done “on any terms”. He said the Scottish Government was “not a distressed seller”.

Mr Gray added: “If the time and circumstances are not right for achieving a sale on the best possible terms for ministers and taxpayers, we are confident the airport will continue to flourish under our ownership.”

New move to buy Prestwick Airport ‘lacked credibility’, says senior Scottish minister, as approach rebuffed

Mr Black said the airport’s main revenue came from cargo and military flights, but he expected passenger traffic to increase.

He said Ryanair, Prestwick’s sole passenger airline, had added three new routes this year as part of a new deal with the airport and, while one of those would not be continuing, “we’re expecting them to do even more routes next year, so see it expanding”.