Issue - meetings

Report of the Director of Finance

The Cabinet considered a report of the Director of Finance which indicated that Birmingham Airport makes a very significant contribution to the regional economy,with a direct and indirect contribution to growth andemployment. In recent years, the Council has received a significant return from its investment in Birmingham Airport Holdings Limited(“BAHL”). In both 2018/19 and 2019/20, the Council received over £1.6m income from its investment.

2020/21 has been a challenging year due to the uncertainty created by the Covid-19 pandemic for both BAHL and the Airline sector across the UK and globally and has led to the worst decline in traffic and income in BAHL’s history. For BAHL the priority has been to maintain sufficient liquidity levels to support the airport into the future as a key strategic regeneration catalyst, whilst ensuring that it is ready to return to full capacity as soon as travel restrictions are lifted.

The report sought approval for the Council to provide Shareholder support of up to £5.7m in loans if required. Together, the 7 West Midland Authorities (“Authorities”) own 49% of BAHL, and vote in one block at meetings. The Council overall owns 5.79% of BAHL’s total ordinary shares and £1.8m of preference shares which pay a fixed dividend of 6.31%. Further detail of the current structure of BAHLwas set out an Appendix to the report. 

A corresponding private report was also submitted to the meeting setting out the commercially confidential matters of the proposals. (Minute 101 below refers.)

RESOLVED that the Cabinet recommends that Council:-

1)  Approves aloan facilityto Birmingham Airport Holdings Limited oncommercial market termsup tothe valueof £5.7m.

2)  Delegates authority to the Director of Finance (S151 Officer) and the Director of Law and Governance, following consultation with the Cabinet Member for Strategic Finance and Resources, to finalise and agree the detailed terms of the transaction with BAHL. The authority under this delegation shall also include:

·  the power to enter into the relevant legal agreements and associated documents necessary to complete the transaction with BAHL; and

·  (in relation to the management of the loan facility) the power to negotiate and agree variations to the terms of the loan facility.