Prestwick Airport Losses Increase

Losses at Scottish Government-owned Glasgow Prestwick Airport have increased, it has been revealed.

The airport bought by Scottish ministers in late 2013 returned a loss of £4.1 million in 2014/15, up from £3.9 million the previous year.

Prestwick chiefs accepted it had been "another challenging year'' but insisted there were "promising signs in a number of areas''.

The annual reports from TS Prestwick Holdco Limited - the company set up up to acquire the airport on behalf of Scottish ministers - warned the loss of some Ryanair flights to Glasgow Airport could be "more severely felt'' in the current financial year.

Pre-tax losses for 2014/15 stood at £8.9 million - almost double the £4.6 million loss before tax the previous year.

The airport's loan from the Scottish Government has also increased, rising from £4.5 million at the end of March 2014 to £10.8 million at March 31 this year.

That could increase further, with ministers having budgeted for a total of up to £25 million of loan cash for the airport by the end of 2015/16.

The Scottish Government took the airport into public hands after former owner Infratil earmarked it for closure.

While the Government hopes to return it to a profit before selling it back to the private sector, ministers have warned that could take time.

The annual report said there had been "positive signs in a number of areas'' at Prestwick, including freight business and military activity.

But it added: "The largest driver of revenue is linked to passenger volumes and the associated passenger spend.''

While it said load factors had increased, it added the number of flights has "seen an overall decline as total capacity has been reduced''.

The report warned: "This will be more severely felt in the next financial year to March 31 2016 following Ryanair's decision to open a base at Glasgow Airport from October 2014.''

Airport 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.

"The recent appointment of four high-calibre non-executive directors brings considerable new knowledge and experience to help drive the business forward.''

A Scottish Government spokesman said: "The Scottish Government is committed to making Glasgow Prestwick Airport the success we know it can be.

"By stepping in to save the airport, we safeguarded 3,200 jobs and secured a vital infrastructure asset that contributes more than £61 million annually to the Scottish economy.

"These financial results are as we expected. As we made clear at the start of the acquisition process, this is a long-term investment. There is no quick fix to turn Glasgow Prestwick Airport around but there are real opportunities to improve in all areas of the business.''

The spokesman continued: "Our investment is on a commercial basis and takes the form of loan funding.

"This attracts a market rate of interest in line with state aid rules. The recent Audit Scotland report confirmed that we are highly likely to generate a return on this investment.

"Loan funding given to the airport sits at £10.8 million to the end of March 2015. We have budgeted for a total of up to £25 million in loan facilities to be made available up to the end of the financial year 2015/16.

"Ministers have made it clear throughout this process that additional loan funding, beyond the £25 million already set out, may be required for Glasgow Prestwick Airport.

"Ministers have committed to updating Parliament as and when this is confirmed. All loan funding provided to Glasgow Prestwick Airport will be made in full compliance with the market economy investor principle and EU state aid rules.''