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DAA could ask State to help finance airport plan

CEO says it will apply if markets make retreat from €2bn funding

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DAA chief executive Dalton Philips. Photo: Peter Rowen
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DAA chief executive Dalton Philips. Photo: Peter Rowen

The Government should be prepared to step in to help bankroll major infrastructure development at Dublin Airport if the DAA finds it difficult after the pandemic to borrow more funds, according to the airport operator's chief executive Dalton Philips.

The semi-State company had embarked on a massive €2bn infrastructure development plan designed to boost passenger and aircraft capacity at Dublin Airport.

But with Mr Philips warning this week that combined passenger numbers at Dublin and Cork could plummet this year to just nine million from more than 35 million in 2019, most of its infrastructure projects are now under review.  Those continuing include a more than €300m new runway project at Dublin and mandatory baggage screening  systems upgrades at the gateways.

"The easy thing to do is to shut up shop and not build anything at the moment, and rebuild our balance sheet," Mr Philips told the Irish Independent.

"I don't think that's the right thing for the country. Do you rebuild your balance sheet or do you think long term?

"We need to carry on. We're going to be under pressure financially to borrow the funds we need.

"Do we need to go back to Government? Probably too early at this stage. But I think it would be a great shame for Ireland Inc if we don't build this infrastructure."

A plea to Government would depend on what the wider funding environment is like as countries emerge from lockdowns and try to get back to business.

"It depends on what level of recovery we see, it depends on how the banks favour infrastructure," said Mr Philips.

"But if we found we couldn't borrow the money, we would absolutely be making our case to Government to see how they can facilitate or underwrite it - we've got a sovereign wealth fund ourselves as a nation," he said.

EU state aid rules have been effectively shelved, with airlines including Lufthansa and Air France-KLM receiving massive government bailouts.

The DAA had gross debt of €760m at the end of 2019, and net debt of €430m.

"We're not going to breach any covenants at all," said Mr Philips. "We have extensive credit facilities in place with both the EIB [European Investment Bank] and our main banks. We have a syndicate of six banks. We've got liquidity.

"We run out of cash at the end of August and we'll have to be going into our credit facilities to sustain the business. Those credit facilities had been put in place to help us on our capital programme.

"The reality is we'll be dipping into them to cover operating losses," he added. "That's not an ideal situation."

The DAA is currently losing €1m a day and has taken a €160m hit since the coronavirus crisis began. It is currently in the midst of a major restructuring programme that will see hundreds of staff either let go or taking career breaks.

Irish Independent

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