Gladstone council takes back $28m debt to protect airport
GLADSTONE Regional Council will take back a $28 million debt to protect the city's airport from the result of a future reduction in flight numbers, under a proposal being made to the Queensland Treasury Corporation.
When Gladstone Airport Corporation took over management of the airport from the council in 2012, it inherited a $65 million debt.
The airport, facing reduced flight numbers as LNG plant construction winds up on Curtis Island, wants the council to shoulder nearly half the debt.
In 2012, airport board chairman David Hamill promised the council's massive investment in the airport would pay off.
"The expectation of our shareholder (the council) is that we will service that debt and in time we will be able to make a return on that investment to the council," he told The Observer in July, 2012.
But present airport chief Phillip Cash said new research had shown flight numbers would likely reduce significantly over 18 months as construction on Curtis Island comes to a close.
Reduced flights are expected to reduce airport revenue to dangerously low levels.
"Post LNG, the revenue will decline and that is going to make it very difficult to service the current debt level," Mr Cash said.
"There would be a major risk to our business," he said.
Mr Cash said a study into projected flight numbers in Gladstone that GAC commissioned had painted a more realistic picture than what was presented at the time the corporation took over management of the airport.
"This is something that has been planned and worked through with our shareholders."
If the proposal goes ahead, ratepayers would be affected.
Council chief financial officer Mark Holmes said the council would repay its share of the debt from council reserves and general rates.
Mayor Gail Sellers said the council had been planning to take the debt back for some time, and was not critical of the airport corporation.
"We have planned for this. I don't see it affecting large infrastructure for our community."
Cr Sellers said she felt Gladstone citizens would understand it was a necessary move.
The council said the move would not present a significant change to the budget.
"There will be no change in the consolidated position of the business as a result of this changed loan agreement between the parties," Mr Holmes said.
"However, there will be reduced income as a result of the revised passenger forecasts," said Mr Holmes.
- Total airport debt to be repaid: $61 million
- Repayments to Queensland Treasury Corporation will not change
- $33 million will stay with Gladstone Airport Corporation
- $28 million will be paid off by Gladstone Regional Council