Multi-million euro ARI lost to Shannon

ALTHOUGH founded and developed at Shannon, lucrative travel retail company Aer Rianta International (ARI) is being lost to the Clare airport and left with the Dublin Airport Authority (DAA) under the arrangement announced on Monday.
Shannon’s debt, estimated at €100 million, is also being left with the DAA but the trade-off has been heavily criticised in the Mid-West, given the massive value of ARI.
ARI was founded in 1988 by Shannon executives and as recently as last year, it was making over €600,000 a week in profits.
When asked by The Clare Champion about the decision to leave ARI with the DAA, Minister Varadkar said, “On the ARI question, I think it’s important to bear in mind that ARI did, of course, start off in Shannon but the contributions made over the years were from much more than Shannon, they were from executives all over the group and finance from all over the group.
“The requirement in legislation is that both of the new entities, Shannon as a separated airport and the residual DAA, both have to be viable so it wouldn’t have been possible to write down the debt – and of course it’s not being written down it’s being carried by Dublin and Cork and its passengers using Dublin that will pay off that debt, not passengers using Shannon – and to grant that concession and also ARI would be a step too far.”
But surely it would have been far more advantageous, as well as fairer, to Shannon to keep its debt but also to retain the ultra-lucrative ARI?
“Not really because 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,” the minister claimed. “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 added.
According to the latest accounts filed by ARI with the Companies Office, it has over €195m worth of assets. Surely with this strong balance sheet it could borrow the €60 required without recourse to the DAA?
“It has no independent balance sheet, it’s part of a group,” the minister stated.
But none of what he said cut any ice with Clare TD Timmy Dooley, who blasted the decision to take ARI from Shannon.
“The minister has a clear lack of understanding of where ARI came from and where it now is. It was consolidated under the DAA banner some time ago but should never have been seen as an asset of Dublin and I think it’s absolutely unacceptable that ARI is not going to form some part of a new devolved Shannon Airport.
“Cutting Shannon adrift at this time I a very regressive step, it leaves the airport without a secure source of revenue and as others have said, it puts its future viability in question.”
Liam Skelly was the first director general of ARI and this week he said Dublin Airport could never have expected to gain ARI for itself at the time of the State Airports Act in 2004 and that failures by politicians had brought it about.
He compared the DAA’s gaining of the ultra-lucrative operation to a lotto win, while he said he would love to see what an independent judge would make of the matter if all the relevant information were presented.
Michael Hanrahan is a former head of finance at Shannon and he was angry about the loss of ARI to Shannon. “The whole thing is a joke. I believe ARI made €35m last year. I know it’s legally the DAA’s because of the agreement in 2004 but why didn’t they leave Shannon with the debt and Aer Rianta International? That debt would have been cleared very quickly.
“He [Minister Varadkar] is saying Shannon wouldn’t be able to back the borrowing needed. This is all nonsense. They want to keep the cash cow.”
He said at a very minimum Shannon should have been provided with a sum of money each year from the profits of ARI.