No dividend was paid in 2004, but that was because of the break-up of Aer Rianta and uncertainties about what level of debt would be assumed by the DAA.
As the DAA’s accounts will not be finalised until March, it is not clear how much it would have paid by way of dividend for last year. Aer Rianta paid the government €6m from its after-tax profits in 2003 and €7.2m in 2002. The DAA declined to comment.
The Department of Transport, which has responsibility for the DAA, said the payment of a dividend was a matter for the minister for finance. A spokesman added, however, that Martin Cullen, the transport minister, would rather see the DAA’s financial resources “focused on delivering better infrastructure for passengers”.
There are two main reasons behind the DAA’s decision not to propose a dividend payment. The company is seeking to fund the development of a second terminal at the airport, which could cost up to €200m. It had hoped to do this by increasing passenger charges by 50% from this month, but the former regulator, Bill Prasifka, granted it only half that increase.
The DAA recently increased car parking charges to help meet the shortfall; retaining the dividend payment would also ease its financial position. The company may seek a dividend holiday stretching over a number of years.
Advertisement
In addition, a provision of company law means that the DAA cannot hand over the assets of Cork and Shannon to the government until its cash reserves match or exceed the value of the two airports. This is to protect the interests of the group’s creditors, lenders and bond holders.
It is not known what value is being placed on Cork and Shannon airports or the level of the DAA’s cash reserves.
Cork’s value has been enhanced of late through a €150m development of a new terminal building, which is scheduled to open in April. Detailed business plans for Cork and Shannon are due to be presented to the ministers for finance and transport by the end of June.
The DAA’s cash reserves could be boosted by asset sales. The company is keen to divest itself of the Great Southern hotel chain. The hotel group carries a book value of €100m, although it is likely to be worth much more given the potential for property development at some locations.
The board of the hotel chain is drawing up proposals on its future for the DAA. Bertie Ahern, the taoiseach, has so far indicated a reluctance to allow the sale of Great Southern hotels, while the trade unions are also opposed to a sale.
Advertisement
Withholding the dividend will provide some source of comfort to DAA bondholders. The authority has faced a high degree of financial uncertainty over the past 18 months.
Apart from the financing of the new terminal, there is also significant disagreement over who will foot the bill for Cork’s new terminal, which was built at a cost of €180m. The board of Cork airport considered a mass resignation over this issue. Gary McGann, the authority’s chairman, has insisted that the DAA will not cover Cork’s debt repayments and Cork must make “appropriate reimbursements”.