Dublin Airport may seek to raise up to €250 million in fresh debt in the medium term.
In a notice to potential lenders, the Dublin Airport Authority (DAA) said it would like to put together a panel of banks which might advance the company funds of between €125 million and €250 million. Any debt raised would have an average maturity of more than 7 years, said the authority.
The company's debt already stands at €400 million but with a capital expenditure plan of €1 billion, the authority will need to raise major additional funds. It also needs a significant rise in airport charges and this matter is being considered by the airport regulator, Bill Prasifka.
The company has a gearing ratio of 47 per cent and a Government-imposed borrowing limit of €700 million. The ratings agency, Standard & Poors, recently warned that if debts from Shannon and Cork airports were added to the balance sheet of Dublin, it could put a major strain on the company and also result in a lower credit rating, pushing up borrowing costs.
A DAA spokesman said yesterday that nothing specific was planned in terms of fund raising at present and the authority was still preparing its business plan.
The preparation of business plans by the three airports has proven to be a difficult process because several issues have not been clarified. It is unclear whether debts of Shannon and Cork will be transferred to the balance sheet of Dublin. It is also not clear who will end up owning Aer Rianta International (ARI).
This week Mr Tadhg Kearney, a member of the Shannon Airport Authority board, suggested that all three airports should own some part of ARI, but this view is not believed to be shared by many staff at Dublin Airport. ARI is potentially a valuable company, with shares in airports like Birmingham, Hamburg and Dusseldorf.
Another major issue is whether Dublin Airport has sufficient reserves to spin off Cork and Shannon airports, a requirement under company law.
Last night Ryanair, in a submission to the airport regulator, threatened legal action if the regulator sanctioned any serious rises in airport charges. Chief executive Michael O'Leary said any DAA capital expenditure should be disallowed if does not have the support of the majority of airlines at Dublin Airport.
He also said any proposals for a second runway at Dublin Airport should be rejected outright. "The regulator should reject any proposal for a second runway which is patently not needed at Dublin until annual traffic reaches 35 million passengers per year, which is the traffic presently being handled by Gatwick Airport on its single runway".
He said the DAA should also be stopped from building a new terminal unless it has an agreement from the airlines that the facility will be "efficient and low cost". He said the DAA should be forced to sell off the Great Southern Hotel chain and any international holdings it has.
