GLASGOW Airport has warned of three material uncertainties “which may cast significant doubt” over its ability to continue as a going concern, as it reported a sharp drop in profits for the year before coronavirus struck.

Directors underlined the huge impact that the pandemic is continuing to have on operations at the airport in new accounts for the company, which is owned by AGS Airports Holdings.

Writing in accounts newly filed at Companies House, which reveal profits dipped to £45.1 million for the year ended December 31, 2019, down from £57m, directors highlight the pandemic and the collapse of Flybe as “two significant events” that impacted operations in 2020.

Traffic at Glasgow Airport ground to a near-halt in March last year following the introduction of restrictions to suppress the spread of coronavirus, with activity subsequently limited to the provision of lifeline services to the Highlands and Islands, the NHS, and air ambulance services.

Traffic was also seriously impacted at Glasgow following the collapse into administration of Flybe in early March in the period immediately prior to the pandemic taking hold. The regional carrier had accounted for eight per cent of the airport’s traffic. Passenger numbers for the full year of 2020 were expected to be down on 2019, the accounts state.

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According to the accounts, passenger traffic had, before the pandemic erupted, fallen by 8.4 per cent to 8.9 million in the year ended December 31, 2019. The decline reflected a 9.1% fall in international traffic, and a 7.5% drop in domestic passenger numbers.

The fall in passenger numbers in 2019 came as Edinburgh Airport had achieved a record 12 months, with passenger numbers rising by 3.1% to 14.7 million. However, Edinburgh reported in October that the number of people passing through fell by 91% to 785,000 between April and September, in light of coronavirus.

The Glasgow Airport directors outline in the accounts a range of steps taken by the company to protect staff, preserve cash and raise finance in the wake of the pandemic. These have included use of the furlough scheme, temporary pay-cuts and the cessation of bonuses. It has also negotiated with suppliers, local councils and tax authorities to “reduce or defer costs”, and “reprioritised its capital investment program.”

However, bosses warn that “there remains uncertainty over the Company’s future trading results and cashflows”.

In notes to the accounts, directors highlight the continuing uncertainty over when lockdown will end and the subsequent pace of recovery, additional funding, and the company’s ability to comply with or obtain a waiver with regard to its June 2021 lending covenants, as material uncertainties.

“The outlook for 2021 continues to be uncertain and highly dependent on the scale and pace of the recovery in trading in 2020,” the directors state.

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Directors warn that a combination of the pandemic, alongside the collapse into administration of Flybe early last year, “will have a significant adverse EBITDA (earnings before interest, tax, depreciation and amortisation) impact” on its accounts for 2020. However, they note the group “will have sufficient liquidity during the year.”

The company states in its accounts that it finances its activities through its operations and has access to inter-group funding within AGS, which also owns Aberdeen and Southampton Airports, as well as external debt facilities. The facilities are due for renewal in 2022 and include covenants which, if breached, “would result in the amounts drawn down becoming payable on demand”.

“The Group has successfully negotiated with its lenders to wave these covenants, due to the current situation, at both 30 June 2020 and 31 December 2020,” the directors add in the accounts.

“Additionally, on 16 March and 18 March 2020 the Group secured further funding of £10m and £28m under its working capital and capital expenditure facilities respectively.

“This therefore leaves the Group with and used capital expenditure facility of £36m.”

Following the initial lockdown in March of last year, Glasgow Airport saw traffic pick up last summer, as services to some holiday destinations came back on stream. However, traffic tailed off as the second wave of coronavirus hit, and more nations were added to the quarantine list.

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This month will see a further decline in activity with the introduction of new restrictions on international travel, including a requirement for people arriving in the UK to have tested negatively for coronavirus.

It is understood that traffic at Glasgow is currently down between 90% and 95% on the level of this time last year.

Before Christmas, AGS began consulting staff on “large-scale redundancies” as it dealt with the decline in business while maintaining around 80% of its overheads.

“The directors believe that the company is well placed to manage its business risks successfully despite the current economic outlook,” bosses add in the accounts.

AGS chief executive Derek Provan, who has repeatedly called for mass testing to be used as a means to keep aviation open safely throughout the crisis, welcomed last week’s decision by the UK Government to insist on negative tests for arrivals, but said the move had “taken much longer than expected”.

Meanwhile, new accounts for Aberdeen Airport show it made pre-tax profits of £18.3m for the year ended December 31, down from £24.4m. The fall came as passenger traffic decreased by 4.1% to 2.97 million.