ARI shows €449 million in profits since 1988

ACCOUNTS filed by Aer Rianta International (ARI) show profits of €449m since its foundation in 1988, according to former Shannon head of finance, Michael Hanrahan. This week he has rejected Transport Minister Leo Varadkar’s claim that the duty free company needs to stay with the Dublin Airport Authority to raise funding.
ARI was founded in Shannon in 1988 and has been based there since. It will remain a wholly owned subsidiary of the DAA after Shannon separates from it in the coming weeks, with the Clare airport receiving no share of its future profits.
Mr Hanrahan examined all the accounts that were filed by ARI with the Companies Office since its foundation. No accounts were available for 1992 or ’93 and for those years he said he took what he called “conservative estimates” of a IR£2.5m profit in 1992 and one of IR£3m in 1993. The overall figure of €449m includes an exceptional item of  €267m due to the disposal of shares in Birmingham airport in 2007.
When the separation was announced on December 3, the minister defended the decision to leave ARI entirely separate from Shannon.
“ARI has considerable investment costs around the world over the next number of years, up to €60m over the next number of years and that money can be raised by borrowing against the DAA’s balance sheet and the DAA’s assets. We didn’t want the first thing that the new Shannon Airport would have to do would be to go off and borrow a whole load of money to build perfume shops in the Ukraine and places like that,” he said.
Mr Varadkar has also indicated that having Shannon’s debt, estimated at €100m, written off, is adequate compensation for a stake in ARI.
Since the State Airports Act of 2004, ARI has generated well over €100m in profits and Mr Hanrahan claimed there is no doubt the €60m could be borrowed if left with Shannon.
“It would be no bother to borrow €60m on the strength of that. In fact I know some boys in finance who’ve said the banks would bite the hand off you if they saw a set of accounts like that.”
The DAA, through ARI, sold its shareholding in Birmingham airport for some €315m in 2007 and Mr Hanrahan said much of the funding used to buy that shareholding in the first place was generated from Shannon.
“At least €10m of that came from ARI. The rest of the money would have come from the cashflows of the whole company. The surpluses of Shannon, which was making surpluses in ’95/’96 of around IRL£3m a year, Cork might have been making IRL£1m and the rest was from Dublin. Shannon probably made up about 37-38%, Dublin maybe about 55% and Cork the rest.”
Chairman of Knock Airport Liam Scollan has complained that Shannon is getting favourable treatment due to the write-off of its debts, but according to Mr Hanrahan, this is far from the truth given the loss of ARI to the airport where it was founded.
“It’s (ARI) a cash cow for sure and this is a bit of larceny. In Knock they’re kicking up about Shannon getting €100m written off, but all of this money (the €449 million of post tax profits generated since 1988) should have gone into Shannon.”
Mr Hanrahan said the reason ARI was set up in the first place was to make Shannon sustainable, but now that it is being separated under very challenging conditions, the multi million-euro company will be left with the DAA.
“It was started because Shannon was going to run into trouble when open skies came into play; that was the whole idea of it. This was at a time when the EU was talking bout abolishing intercommunity duty free, so obviously the next best thing was to go overseas. We had gone to Dubai in 1983 and made a successful job of it, so why wouldn’t it be natural that you could go to other countries and do it successfully there?” he said.