Cardiff Airport could get extra £6.8m loan from Welsh Government

Welsh ministers are considering loaning Cardiff Airport a further £6.8m, after approving a loan of £21.2m last year.

It has now emerged the airport had requested £28m at the time.

The government will carry out "analysis and financial due diligence" before the additional funding is approved.

Writing to an assembly committee, civil servant Andrew Slade says the initial £21.2m will help the airport invest in buildings and infrastructure, route development, and security..

A Tory AM said the Welsh Government's economic strategy made "no sense" but First Minister Mark Drakeford said the airport was a "success story".

The loan would be repayable over 25 years.

In his letter to the public accounts committee, Mr Slade also refers to the importance to the airport of troubled airline Flybe.

He says the airline attracts between 320,000 and 340,000 passengers a year and the Welsh Government "warmly welcomed" the rescue deal the UK government struck with Flybe in January.

Referring to the impact on Cardiff Airport of an airline like Flybe ceasing to trade, Mr Slade, director of the Welsh Government's economy, skill and natural resources department, said he "would anticipate" such a scenario "to be reflected" in the airport's business plan.

"In terms of the recently agreed extended commercial loan facility," he writes, "I would like to reassure the committee that a range of downside scenario models were included within the financial due diligence which informed our decision to award the loan."

"These scenarios included a 'catastrophic event' resulting in significantly reduced traffic for an extended period, and a significant operator stopping its operations."

The £21.2m loan was an extension on the £38.2m the airport could already borrow from the government.

The Welsh Government bought the airport in 2013 for £52m.

Since then passenger numbers have increased significantly but in December the airport posted a pre-tax loss of £18.5m, nearly three times higher than the previous year.

Giving evidence to the assembly's public accounts committee, airport chairman Roger Lewis said its revenue covers its operating costs and investment has gone into making improvements.

Referring to an analysis of the airport done by consultants Northpoint, he said: "It says Cardiff Airport's economic impact 'matches that of larger UK airports, outperforming airports of its size.'

"In terms of our financial performance, the financial performance 'meets expectations.'

"It ends by saying 'there is no sound operational, commercial or financial reason for the airport at this particular moment to go into private ownership.'"

Conservative South Wales Central AM and Rhoose councillor Andrew RT Davies said: "We all want to see a thriving airport in Rhoose and to their credit the management team at Cardiff Airport have overseen some significant developments and improvements.

"However, I have serious concerns regarding the casual nature of the Labour Welsh Government's economic strategy, which makes absolutely no sense and will have a detrimental impact on the future of the airport."

"One minute this Labour Government is declaring a climate emergency and cancelling vital infrastructure projects that would benefit Rhoose such as the M4 relief road by citing environmental factors, yet the next minute it's chucking millions and millions of pounds at the airport."

Speaking at his monthly press conference First Minister Mark Drakeford said: "Cardiff Airport since it was taken into public ownership has been a success story and in very sharp contrast to the declining path to closure that it was on prior to the Welsh Government's intervention.

"We will continue to work with the airport, we will invest where there is a strong case to do so, to make sure that pathway to success continues."