Two weeks after his re-election as Tees Valley Mayor on 2 May, the Financial Times (FT) revealed on 18 May that Baron Ben Houchen of High Leven has been in talks to sell off nearly half of Teesside International Airport to a private interest.
Bringing the airport back into public hands in early 2019 was a wildly popular move locally. Passenger flights have opened to some locations in Europe as well as others in the UK.
The airport also hosts a new cargo-handling facility, two flight schools, a medical transfer operation, three defence contractors and a commercial aircraft maintenance service.
A business park is being developed next to the airport. The site extends into the Teesside Freeport zone enjoying the financial perks of freeport status.
The purchase price of the airport – to the Flacks Group owned by Michael Flacks – is reported as £40mn. That’s the same amount that was paid to bring 89% of the facility into public ownership five years ago, prior to recent investment in improvements. The sale is expected to be finalised in August.
The purchasing party is to buy 49% of the airport. The existing shareholders – the Tees Valley Combined Authority (TVCA) and local councils – are expected to become sleeping partners after the deal, with Flacks Group taking over management, reports the FT.
The intention for the airport up to now has been to develop a freight trade plus allied businesses in logistics, manufacture and repairs. Although Houchen has publicly touted the passenger transport side of the business.
The purchase will mark a change of focus away from passenger transport and towards investment in other services such cargo and maintenance.
Since the public takeover of the airport (and before), Teesside International Airport Ltd (TIA) has made continuous losses. In the year to March 2020 the operating loss was £3mn, spiking the following year to £13.4mn. Operating losses were £13.9mn for 2022 and £5.7mn for 2023.
The company enjoys drawdown access on two loan facilities with TVCA which totalled £88mn in the year to March 2023. The drawdown on the loan facilities in that year amounted to £63.3mn.
In the same year, accounts of TIA’ s immediate parent company Goosepool 2019 Ltd, show the airport had a total debt of over £121mn to TVCA, which is the ultimate parent.
The move to sell off part of a struggling business whilst remaining in overall control with a majority ownership could be a wise step.
“The airport is not for sale”
But what has raised eyebrows is the double-speak of Houchen’s pronouncements.
Just a day before the Financial Times article, Houchen declared in a Facebook post:
“..I want to make it absolutely clear. The airport is NOT for sale.
..”Now back to work – I haven’t forgotten I’ve got these new flights to Malaga and Tenerife to deliver.”
Accusing Labour and a response
The airport was a cornerstone of Houchen’s mayoral campaign. He accused the Labour candidate Chris McEwan of considering building over the airport as a Darlington councillor in 2016 and 2017.
(An alternative explanation was that the house-building, not adjacent to the facility, would yield S106 funding to bale out the struggling airport.)
As well as his social media posts, Houchen launched a barrage of Facebook ads just before the election declaring that Labour would close the airport and build 350 houses on the land.
Houchen’s ads proclaimed,
“Don’t let Labour close our airport”
“7 days to save our airport.”
“This vote is about who you want to put in charge of OUR airport “
The assault drew fire from McEwan with his own Facebook ad in which he said:
“The airport is safe in my hands…
“I wholeheartedly support our airport and will not demolish or close it.”
No mention of the sell-off
On their website, the Flacks Group describes itself as, “one of the leading investors in distressed assets and special situations worldwide.”
According to the FT they recently purchased 500 acres of land near the airport.
Members of the TVCA Transport Committee were surprised that their agenda papers, sent out the day before the FT article, made no mention of the sell-off.
Redcar and Cleveland councillor Carl Quartermain posted on Twitter/X:
Update:
Since the FT report, various news organisations have carried Houchen’s assertion that the airport would not be sold.
Time will tell.
