Report Warning On Sale Of Prestwick Airport

Scottish Government plans to sell Prestwick Airport back to the private sector are viable, but it could take "some years'' for them to be achieved, public spending watchdogs have said.

Ministers bought the struggling airport for just £1 from owners Infratil in November 2013, fearing if they did not step in Glasgow Prestwick would close.

Audit Scotland said while the business case for the deal was based on "optimistic'' passenger numbers, the Scottish Government could still "reasonably expect a positive return'' on the cash being loaned.

But its report said it could take almost a decade after the purchase before the airport would be able to start repaying the money.

The Government has so far committed to provide £25.2 million in loan funding to Glasgow Prestwick Airport, with £9 million of the sum having already been handed over.

Ministers are seeking to return the airport - which had been running at a loss - to profitability before selling it back to the private sector.

Spending watchdog Audit Scotland, which has examined the deal, said: "The Scottish Government is still assessing a number of potential future opportunities for Glasgow Prestwick Airport.

"These will take time to put into effect and it may be some years before it can achieve its aim of selling the airport back to the private sector.''

Its report stated the airport was expected to "start generating positive operating cash flows'' in the financial year 2022-23, and would "then be in a position to start repaying Scottish Government loans and interest''.

The loan funding and associated interest charges could be paid back over the 30-year period, it added.

Audit Scotland said: "The Scottish Government's long-term aim is to sell Glasgow Prestwick Airport back to the private sector once the airport is viable.

"Owing to the uncertainties around the future development opportunities, the Scottish Government has not yet set a timetable for this.

"It is important that its plans for the airport include regular consideration of its ongoing financial viability and a well-defined exit strategy covering a variety of possible scenarios.

"The Scottish Government recognises that the long-term opportunities could take some years to take effect if they are realised.''

The airport, which was established in 1934, had been on the market for 18 months when ministers stepped in and bought it over.

Falling passenger numbers and a decline in freight business meant it had been operating at a loss for a number of years.

By 2012-13 passenger numbers had fallen to 1.1 million, down from a peak of 2.4 million in 2007-08, while the volume of freight business fell by two-thirds over the same period.

Audit Scotland found that the Scottish Government's business case for the purchase "generally'' followed Treasury guidance, but said it should have been clearer in some areas.

The report also said a wider range of options could have been looked at and that while the business case stated buying the airport was in line with the Government's economic strategy, it failed to "elaborate on how purchasing the airport will do this''.

It has recommended ministers "ensure that there is a clear vision and strategy for Glasgow Prestwick Airport, which takes into account the airport's future development potential''.

This should include "robust business and financial plans'', a full evaluation of all potential risks, including the airport's ability to repay its loan funding, and a well-defined and regularly reviewed exit strategy setting out the timescale for selling the airport to the private sector.

Caroline Gardner, Auditor General for Scotland, said: "Our report recognises that the purchase of Glasgow Prestwick Airport was carried out to a tight deadline and in uncommon circumstances.

"The Scottish Government and Glasgow Prestwick Airport should now ensure that a clear strategy is put in place which takes into account future development potential and includes robust business and financial plans, full evaluation of potential risks and a well-defined, regularly reviewed exit strategy.''