Minister for Transport Martin Cullen has admitted that Dublin airport is not financially strong enough to absorb the debts of Cork airport.
Politicians and business leaders in Cork are anxious that Cork becomes debt-free over the next few months. However, in parliamentary replies this week to Fine Gael transport spokeswoman Olivia Mitchell TD, this appeared to be ruled out by Mr Cullen.
Under the 2004 State Airports Act, the three airports are to become autonomous bodies. When the Bill was introduced, the then minister for transport Séamus Brennan said he hoped Cork airport would be debt-free under the new structure. But rising debts at Dublin airport, caps on passenger charges and losses associated with the Great Southern Hotel group have weakened the balance sheet of the Dublin Airport Authority (DAA).
The DAA is also committed to spending over €1.3 billion on airport infrastructure.
This week Mr Cullen said: "We both know the assets available to the Dublin Airport Authority are not sufficient to leave all these elements debt-free."
However, Mr Cullen emphasised the situation might change in the future. The admission that Dublin is unable to absorb the debts is likely to be greeted negatively in Cork. But Mr Cullen explained that Dublin would have serious problems accepting the likely debt level of €200 million.
"If Cork airport wants to wait, that is outside any political consideration, irrespective of who stands in my position. If that airport wants to be entirely debt-free, under the Companies Acts, where the distributed reserves must be sufficient at Dublin Airport to distribute the Cork debt - which as I publicly stated will probably involve € 200 million - that will take time to achieve.
"We should also bear in mind that Dublin Airport Authority is now embarking on an investment programme of at least € 1.3 billion for Dublin airport, which is essential for the development of this country. I do not know where the deputies think the assets will come from to cater for all that, and for the borrowings," said Mr Cullen this week.
The other issue on the horizon for the Dublin Airport Authority is a possible credit downgrade from ratings agency Standard & Poors. If the airport company has its ratings downgraded, the cost of its borrowings will rise. The other source of funds however is its range of international holdings, including stakes in Hamburg and Birmingham airports.
