Teesside Airport: Accounts reveal £11.8m loss

The figure is a £2m improvement on last year but shows the effect of a second year  battling lockdowns and travel restrictions during the pandemic.

Tees Valley Mayor Ben Houchen told The Northern Echo the figure was "about £4million below what we thought it would be" because the second year of Covid was supposed to be more damaging to the industry than the first.

To continue the push towards profit - or breaking even - around 2025, the latest Tees Valley Combined Authority investment plan out today includes an additional £20million to the airport to cover the loss and to be put towards creating new jobs, bringing more flights and generating extra revenue.

Mr Houchen said: "Because we attracted flights during Covid, with the likes of Ryanair, TUI and others, we've gone up the category scale and your fixed costs go up because you've got to upgrade the airport to a high standard.

"So the fire cover, air traffic control, and security from landside to airside have cost us an additional £1milllion each to upgrade. And if you don't upgrade, you can't have Ryanair and TUI because they're of a higher category.

"When you look at the original business plan, when we were getting more passengers or getting more flights, it actually showed our costs and our losses going up. Because you've got to put those fixed costs in as you get more successful. And then once you get to roughly where we are now, then your fixed costs almost stay the same."

He said he had to keep putting money into the airport as the pandemic hit, to secure jobs and make it fit for a return to business.

“You can’t just run away from an airport and turn your back on the staff who have worked their socks off to keep the airport flying over the years, and part of the losses come from protecting the airport’s loyal workforce," he said.

"We topped up furlough for 100% of salaries and are proud of the fact there was not a single redundancy – an investment which paid off with this year’s summer season running incredibly smoothly and Teesside being named the UK’s second most punctual airport.

TUI takes off from Teesside for the first time in almost a decade. (Picture by Dave Charnley)

"So between upgrades between additional cost of staffing, keeping them on during, in effect, the time when the airport was closed, and not laying anybody off, and then topping up the pay. That's what accounts for a big chunk of the losses.

"We will see passenger numbers go through the roof relative to what we had, but the honest answer is I couldn't tell you whether we're going to get to half a million passengers in the next 12 to 24 months. That's largely because airlines are again struggling with staff and struggling to cope with the flights that they've got at the minute.

"We will get more flights over the next 12 months, that's definitely going to happen. But will it be as quick as we would like? Probably not, but that's the unwinding of Covid. It's frustrating, but it's where we are."

The latest figures come as the airport's  former owners Peel Group said it was reviewing options for the future of Doncaster Sheffield Airport after concluding “aviation activity on the site may no longer be commercially viable”.

The mayor said that means the airport probably wouldn't have been here at all if the Combined Authority hadn't taken its biggest gamble and brought it from Peel in 2019.

“Every airport in the world has been hit by the coronavirus pandemic – it wasn’t part of anyone’s business plan. The devastating news that Doncaster Sheffield Airport is facing closure is a stark reminder of Teesside Airport’s destiny under its previous owners.

“Now it is in the hands of the people, and being operated by those who know it, love it, and are willing to invest in it – rather than a company happy to run it into the ground and drop it like a stone when the going gets tough.

“We are working with businesses like Draken Europe, Willis Asset Management and FedEx to bring more good quality well-paid jobs to Teesside, which is exactly what will turn our airport’s fortunes around so it can be fully commercially viable and stand on its own two feet.”

The Mayor said the airport’s ten-year turnaround plan is still on track and it is projected to come back into profit in the next three years.

Replying to critics calling for more financial clarity, he said: "The accounts are right here, so there isn't anything to hide and I've never understood that - what is it that you don't have?

"I get frustrated with the Teesworks stuff as well. All the accounts are published with all the details and yet people say there's this veil of secrecy. What are we not telling you? I don't understand. It's just an easy line that they don't have to defend."

Last year, accounts have revealed how the airport has recorded its highest ever loss since being returned to public ownership in 2019, with £13.8m lost in the financial year.