Fury mounts over Shannon rip-off

SINCE Aer Rianta International (ARI) came under the Dublin Airport Authority’s (DAA) control in 2004, it delivered profits of around €164 million, according to the eight DAA annual reports published since.

This doesn’t include items such as the €315 million raised through the sale of ARI’s shareholding in Birmingham Airport in 2007.

During 2010 and 2011, ARI recorded profits of over €50 million on its overseas operations, a sum that is understood to be around half of Shannon’s overall debt.

ARI was the brainchild of Shannon-based executives and they are angry Shannon is on the cusp of losing all connection with ARI, following last month’s Government decision that Shannon will leave the DAA structure, with ARI set to remain part of the group along with Dublin and Cork airports.

While Shannon is set to be debt free once it leaves the group, it is claimed this alone would be a poor substitute for a share of the ultra-lucrative ARI. Minister Leo Varadkar disputes this and he told The Clare Champion that, “ARI is probably worth less to Shannon than the removal of the debt.”

The figures quoted in the DAA annual reports are lower than those filed by ARI with the Companies Registration Office but a Department of Transport spokesman explained the discrepancy. “The differences arise as the ARI accounts filed with the Companies Office are single-company accounts, whereas the number shown in the DAA annual reports is a consolidated number, which includes total contributions from its various subsidiary and associate companies.”

The Dublin Airport Authority (DAA) annual report for last year stated, “Group sales at ARI’s international business declined by 6% during the year due to a move to an indirect sales model in certain locations. However, the underlying business saw strong sales.

“ARI’s overseas business made a profit of €31.8 million in 2011, compared to €18.8 million in the previous year, as one-off factors such as the disposal of its shareholding in three Russian businesses boosted its financial performance.”

It stated that its Irish division had “performed well” with total retail sales at the Irish airports increasing by 2% to €225 million.

The 2010 annual report stated the company had made a profit for the financial year of €18.8 million.While the 2009 annual report said it had been a difficult 12 months, it still made a healthy profit.

“ARI had a challenging financial year in 2009, with profits of €13.4 million (before exceptional items) a reduction of 47% on the previous year.”

ARI celebrated 20 years in operation in 2008 and according to the DAA annual report it “contributed some €25 million or 32% of Group profits (excluding exceptional items) a decrease of 13% compared to 2007. On a like-for-like basis, after taking account of the loss of the income stream from ARI’s former shareholding in Birmingham International Airport, following its successful disposal in 2007, profit was up by 6%.”

2007 was a successful year for ARI, with the company recording profits, excluding exceptional items of just over €29 million. It also secured a contract to operate duty-free and duty-paid concessions at Terminal 3 of Moscow’s Sheremetyevo Airport. This was expected to generate gross sales of over €1 billion over seven years.

Profits weren’t far off €20 million in 2006. “The profit contribution from ARI’s combined interests, including the exceptional profit on the disposal of Hamburg Airport, increased by 12% last year to €19.5 million.”

In 2005, the profit contribution identified in the annual report was €17.4 million, up from €9.4 million in 2004.

Another windfall for the DAA resulted from the sale of the ARI’s 24.125% shareholding in Birmingham in 2007, which sold for the sum of €315 million. The previous year, it generated a significant sum, following the sale of its share of Hamburg Airport. ARI also holds minority shareholdings in Dusseldorf Airport and has interests in Pafos and Larnaca in Cyprus.

Some of the former executives who spoke to The Champion this week also claim Shannon didn’t benefit to any significant extent from the DAA’s disposal of the Great Southern Hotel Group in 2006, which sold for €265 million.

In 2009 a €21 million US Customs and Border Protection pre-clearance facility opened but analysts claim that both Cork and particularly Dublin, have received far more capital investment since the abolition of Aer Rianta and the controversial State Airports Act of 2004. A new €100 million terminal opened in Cork in 2006, while T2 at Dublin Airport cost at least six times this amount. Dublin also has full US CBP pre-clearance facilities.