A new airport.... South Yorkshire Airport City?

[radar]

That’s very true, however I would caution that money lost isn’t necessarily how the valuation would work.

No, of course not. But broadly, they have no reason to sell it if they’re not getting their investment back in some form.

 

[pug]

No, of course not. But broadly, they have no reason to sell it if they’re not getting their investment back in some form.

No exactly, so with them seemingly refusing to budge on the turnover top slice then it either means they are holding firm and are not necessarily in alignment with SYMCS (I.e they said if you want the airport you’ll have to buy it) and/or the financial risk of reopening the airport under a lease regardless of terms is unacceptable to the financial officers so the only option available is to purchase the freehold. I’m tending towards the latter here, and either way I can’t see Peel being keen to let it go for a song unless there are some justifiable reasons line significant concessions on offer elsewhere.

I have far more faith in Peels negotiation team than SYMCAs. In fact this is likely to be noise to drown out a clear negative.

 

[Eusebius]

Broadly, Peel would have been willing to sell the site for A LOT of money, reflecting their investment in the site and of course the profit they could realise from developing it. Obviously we don't know what that figure might have been but you'd have to suspect a few hundred million pounds. If they really have suddenly agreed to sell it for a few tens of millions then that's weird. As I said earlier, the lease was very obviously engineered to ensure Peel got the site back as soon as possible.

Just guessing obviously, but I can only think they'll write some sort of buy back agreement where the site can only be sold back to Peel at a very cheap price when the airport project collapses again, or else some environmental or geological problem has come to light that effectively renders the site worthless. Although it's hard to imagine that such a problem would only just have come to light.

 

[pug]

Broadly, Peel would have been willing to sell the site for A LOT of money, reflecting their investment in the site and of course the profit they could realise from developing it. Obviously we don't know what that figure might have been but you'd have to suspect a few hundred million pounds. If they really have suddenly agreed to sell it for a few tens of millions then that's weird. As I said earlier, the lease was very obviously engineered to ensure Peel got the site back as soon as possible.

Just guessing obviously, but I can only think they'll write some sort of buy back agreement where the site can only be sold back to Peel at a very cheap price when the airport project collapses again, or else some environmental or geological problem has come to light that effectively renders the site worthless. Although it's hard to imagine that such a problem would only just have come to light.

Think that’s perhaps looking too deep into it at the moment. Peel will know by this point whether there are any geological or contamination risks at this point. There was a long held belief that the site may be at risk of subsidence but think that was blown out the water years ago as the MOD had prevented any mining within a set vicinity of the site to prevent this. What Peel do know is under there is significant mineral extraction potential, the quarries quickly encroaching the 02 threshold prove this.

 

[Eusebius]

What Peel do know is under there is significant mineral extraction potential, the quarries quickly encroaching the 02 threshold prove this.

Well quite, which makes this all very odd. I suppose a deal in which SYMCA buy the site and then sell it back to Peel in a few years when the project collapses might suit everyone's purposes. I don't know. The only other thing I can think of is AFFF decontamination. It seems to be a new problem and although it sounds like a nothing burger a bit of Googling suggests it can cost staggering sums to clean up. That could account for the low price and Peel's sudden interest in offloading the site. If it's that then they might not be able to do anything with the site without a very difficult and hugely expensive cleanup project.

 

[northsouth]

This seems a bit strange regards the proposed purchase I thaught this was the first option the council tried back in 2022/3 but was unaffordable as peel were unwilling to sell at a reduced price and they could not afford anyway - so the lease was the best option, now what this becoming even more complex and as previous posts where is all the funding coming from

 

[White Heather]

This seems a bit strange regards the proposed purchase I thaught this was the first option the council tried back in 2022/3 but was unaffordable as peel were unwilling to sell at a reduced price and they could not afford anyway - so the lease was the best option, now what this becoming even more complex and as previous posts where is all the funding coming from

Wouldn't a purchase mean that the entire Business Case would need to be revised and reconsidered by the Council Auditors, resulting in even further delay? Leasing and buying are very different in terns of risk.

 

[Stagman]

You have got to remember that Peel publicly stated there was an offer accepted to sell the airport, but the bidder didn't come forward with proof of funds. Think that offer was either £100-150m. So there has been a figure publicly released of what Peel are willing to accept.

But remember the big show in the hangar with the Vulcan outside. Where all the Councils agreed to the Lease. But not after asking the questions are we going to have any of our funding used. When it was said it was just Doncaster's pot that was funding it, they all happily said yes.

So how is SYMCA going to fund purchase of freehold. If it means the other councils having to have some of their funding going towards it then there is going to be some wrangling and scratching of backs to be done to get all the councils to agree to this. Is SYMCA just going to take Doncaster's pot share for purchase, so that would leave very little in the bank to get the airport up and running.

This all looks to be another big delaying tactic.

If SYMCA buys the Freehold then CDC still has the Lease, but instead of it being paid to Peel, all the payments will go to SYMCA. So SYMCA would have to renegotiate the Lease or terminate the Lease. Or would SYMCA wait until the 2031 break clause before binning the lease.


This will mean that CDC Business Case for funding the project is completely out the window and binned. This is due to the funding not going to be forthcoming to CDC and rerouted via SYMCA. With the funding now being done by SYMCA.

CDC will have to pull the plug on it and as a result of no funding then the plug would be pulled on FlyDoncaster. If that's the case then with CDC/ FlyDoncaster name on the airspace application, then progress would be terminated. In which case SYMCA would be having to start it all from scratch once again. Would SYMCA want to take on FlyDoncaster, it could possibly but would be bumpy road.


If SYMCA do purchase the Freehold, I reckon they would want to start fresh clean slate to it all.
So options are:
SYMCA runs it themselves.
SYMCA brings in an established operator and lease it out to them.
SYMCA runs a franchise model and puts it out to operators to run.


Since Peel closed down DSA Limited and dissolved it. Means SYMCA are not buying an operational company. It is just a land transaction.

So it is totally different to the TVCA model with Teesside Airport, where TVCA purchased an operational company that owned the land.

SYMCA doesn't have that option, so is just basically a land transaction. Then SYMCA would have to build a company up from scratch, which then would become a sellable vehicle.

It doesn't seem an easy or quick task for SYMCA. But one thing it is looking like is the opening date will be pushed into the 2030's now.

So it looks like CDC's hands on role is going to come to a full stop.

 

[rabbitfoot]

when is come out what the purchase price is, and what is included. i am only guessing that peel will not want to included the land they own outside the airport. i would not be surprise if peel ,formed some kind of partnership with the other owners of the land and made a huge development with CDC completely onboard.

 

[pug]

In the absence of any funding having been approved to follow the necessary due diligence, valuation fees, financial appraisal and any other development work associated with the new acquisition proposition, aside from the £16million already allocated to pursues the lease agreement and all the work associated with that (some of which may now need revisiting?) then I fully expect to see something along the lines of;

‘Note that substantial commercial alignment has been achieved with Peel.
Agree that acquisition should now be progressed as the preferred property solution.
Approve/delegate an additional development budget so officers can undertake the necessary valuation, legal, financial and technical appraisal.
Authorise continued negotiations.
Return for subsequent approval subject to satisfactory assurance.’

That is of course in the absence of some serious external investor which could change matters measurably. But there is no evidence for this at present.

So it appears the agreement is somewhat more advanced than initially believed, but there’s still a small print.

There is apparently a negotiated deal, and importantly it includes the airport freehold plus the Innovation Quarter employment land.

But read the small print before declaring victory.

It still requires SYMCA Board approval, Peel Board approval and the conclusion of an agreement between SYMCA, CDC and Peel. SYMCA itself says that approval would make it the freehold owner and landlord to CDC’s existing lease. In other words, ownership has not transferred yet.

We still don’t publicly know the price, where the acquisition money comes from, how this interacts with the £159.52m already allocated to reopening, or what conditions have to be satisfied before completion.

So this is no longer merely ‘an option they’re investigating’. I was too cautious on that point. There is clearly a substantive acquisition proposal.

But equally, ‘we’ve agreed a deal subject to approval’ is not ‘we have bought the airport’.

Let’s see the Board papers rather than the headline.

 

[rabbitfoot]

Doncaster Sheffield Airport set to come into public ownership

South Yorkshire Mayoral Combined Authority plans to buy Doncaster Sheffield Airport.

www.bbc.co.uk

and the land!!!

the land must be worth at least £150 million

 

[northsouth]

Watched look north tonight lots of coverage everyone seems up beat and optimistic but one thing that struck me was none of the people being interviewed have any aviation experience I think these politicians / councillors are going experience a very bumpy ride as they seem to think that the business is just going to appear as the current aviation market is saturated and even with high fuel costs and airline consolidation I just can’t see where the business will come from

 

[pug]

Doncaster Sheffield Airport set to come into public ownership

South Yorkshire Mayoral Combined Authority plans to buy Doncaster Sheffield Airport.

www.bbc.co.uk

and the land!!!

the land must be worth at least £150 million

Who knows, the papers they said would be made available to the public ‘later today’, alas have not been made available.

I wonder what’s in the small print here. Peel are still cautious to mention the ‘wider vision’. I would expect some very favourable planning covenants on their newly acquired development land.

They better hope this works, they better hope there’s a fundamental change in airline appetite. If there isn’t this will cost SYMCA millions and undermine Burnhams wider devolution agenda.

 

[Dsa-Realist]

Who knows, the papers they said would be made available to the public ‘later today’, alas have not been made available.

I wonder what’s in the small print here. Peel are still cautious to mention the ‘wider vision’. I would expect some very favourable planning covenants on their newly acquired development land.

They better hope this works, they better hope there’s a fundamental change in airline appetite. If there isn’t this will cost SYMCA millions and undermine Burnhams wider devolution agenda.

Who knows, the papers they said would be made available to the public ‘later today’, alas have not been made available.

I wonder what’s in the small print here. Peel are still cautious to mention the ‘wider vision’. I would expect some very favourable planning covenants on their newly acquired development land.

They better hope this works, they better hope there’s a fundamental change in airline appetite. If there isn’t this will cost SYMCA millions and undermine Burnhams wider devolution agenda.

This whole debacle just gets worse. So are CDC going to develop gateway east themselves? A terrifying thought given the property developments they have been involved in to date have been far from successful. Will “the people” of “the people’s airport” be happy with “the people’s debt” that follows?

 

[pug]

This whole debacle just gets worse. So are CDC going to develop gateway east themselves? A terrifying thought given the property developments they have been involved in to date have been far from successful. Will “the people” of “the people’s airport” be happy with “the people’s debt” that follows?

Sounds like Coppard has taken this away from CDC, which is a good thing in a way as he’s infinitely more credible than Rod Jones. However I still think it’s vital we see everything that’s being proposed here and not just the political soundbites.

 

[Dsa-Realist]

Sounds like Coppard has taken this away from CDC, which is a good thing in a way as he’s infinitely more credible than Rod Jones. However I still think it’s vital we see everything that’s being proposed here and not just the political soundbites.

I’m far from convinced that he is really any more credible than Ros. Public sector all his life with little understating of value for money and commercial reality

 

[Guppy]

This whole debacle just gets worse. So are CDC going to develop gateway east themselves? A terrifying thought given the property developments they have been involved in to date have been far from successful. Will “the people” of “the people’s airport” be happy with “the people’s debt” that follows?

I don’t know what you mean, the city park and ride is always busy, well shall we say full, okay okay I’m stretching the truth a little bit here like the mayor , a single carpark space is always full, ok. Well what about the rail college they ran, it had at least 5 students at it peak, the surrounding education establishment were shaking in fear 🤣 all very successful 🙃

 

[pug]

Right I’ve been through some more details emerging that I can’t link to, some of it might be slightly out of step but here’s what’s becoming apparent. It’s not all good news by any stretch.

Having gone through the detail now emerging, I think yesterday’s headlines rather oversold what this actually means.

The important points as I understand them are:

The lease negotiations have effectively failed. Peel apparently agreed movement on the passenger and freight break points, but the revised turnover rent would still have cost around £60m over 30 years and therefore failed to satisfy SYMCA’s funding conditions.

The alternative is for SYMCA to buy the airport freehold and a substantial amount of surrounding employment/development land. The purchase price has apparently been agreed but remains commercially confidential until completion, with an independent valuation required to support it.

The acquisition is to be funded through borrowing, modelled over 30 years. Importantly, the £121.62m of Gainshare previously earmarked for Doncaster’s investment plan would remain with SYMCA as part of the funding arrangement.

This is also far more than SYMCA simply becoming a passive landlord. The proposal apparently gives SYMCA 70% of the voting rights in FlyDoncaster, with CDC retaining 30%, while SYMCA would also provide lending to the airport company.

The bit I find particularly concerning is that the airport reportedly makes losses in the early years under every scenario modelled, while the report explicitly acknowledges a real risk of “financial contagion” into other MCA funding sources.

The aviation assumptions aren’t particularly reassuring either. The low and base passenger cases are apparently regarded as the most likely, with the low case taking several years before airlines use DSA to any significant extent.

Nor is Spring 2028 guaranteed. Turner & Townsend are apparently unable to provide evidenced assurance that the revised reopening dates can actually be achieved.

There is at least an eventual off-ramp. If the credit required by the airport exceeds the value of the underlying land, the Board would have to decide whether to continue supporting the operation or wind it down and realise the land value.

So this may indeed be better value than continuing with an increasingly expensive and restrictive Peel lease. I’m open to that.

But that is quite different from the impression created yesterday that purchasing the freehold somehow resolves the fundamental viability issue.

It doesn’t. The public sector is effectively replacing Peel as the party carrying the long-term property risk, while simultaneously taking considerably greater exposure to an airport which is forecast to lose money initially under every scenario and whose airline demand remains uncertain.

That is rather more nuanced than ‘WE ARE BUYING THE AIRPORT!’

 

[AviatorYorks]

Right I’ve been through some more details emerging that I can’t link to, some of it might be slightly out of step but here’s what’s becoming apparent. It’s not all good news by any stretch.

Having gone through the detail now emerging, I think yesterday’s headlines rather oversold what this actually means.

The important points as I understand them are:

The lease negotiations have effectively failed. Peel apparently agreed movement on the passenger and freight break points, but the revised turnover rent would still have cost around £60m over 30 years and therefore failed to satisfy SYMCA’s funding conditions.

The alternative is for SYMCA to buy the airport freehold and a substantial amount of surrounding employment/development land. The purchase price has apparently been agreed but remains commercially confidential until completion, with an independent valuation required to support it.

The acquisition is to be funded through borrowing, modelled over 30 years. Importantly, the £121.62m of Gainshare previously earmarked for Doncaster’s investment plan would remain with SYMCA as part of the funding arrangement.

This is also far more than SYMCA simply becoming a passive landlord. The proposal apparently gives SYMCA 70% of the voting rights in FlyDoncaster, with CDC retaining 30%, while SYMCA would also provide lending to the airport company.

The bit I find particularly concerning is that the airport reportedly makes losses in the early years under every scenario modelled, while the report explicitly acknowledges a real risk of “financial contagion” into other MCA funding sources.

The aviation assumptions aren’t particularly reassuring either. The low and base passenger cases are apparently regarded as the most likely, with the low case taking several years before airlines use DSA to any significant extent.

Nor is Spring 2028 guaranteed. Turner & Townsend are apparently unable to provide evidenced assurance that the revised reopening dates can actually be achieved.

There is at least an eventual off-ramp. If the credit required by the airport exceeds the value of the underlying land, the Board would have to decide whether to continue supporting the operation or wind it down and realise the land value.

So this may indeed be better value than continuing with an increasingly expensive and restrictive Peel lease. I’m open to that.

But that is quite different from the impression created yesterday that purchasing the freehold somehow resolves the fundamental viability issue.

It doesn’t. The public sector is effectively replacing Peel as the party carrying the long-term property risk, while simultaneously taking considerably greater exposure to an airport which is forecast to lose money initially under every scenario and whose airline demand remains uncertain.

That is rather more nuanced than ‘WE ARE BUYING THE AIRPORT!’

Interesting.

It is beyond evident that there is very little aviation experience in the room too as someone else mentioned earlier. The fact that Look North rolled out an incoherent Chadwick who mumbled some nonsense just makes the whole project look amateur.

I note that Doncaster (Foster and Hinchley) are down as now attending the Routes conference in Frankfurt this week. Another large amount of money down the drain to try drum up business for an airport that has no guarantee of even opening. The industry will laugh them out of the room with their absolute lack of knowledge.

 

[pug]

Interesting.

It is beyond evident that there is very little aviation experience in the room too as someone else mentioned earlier. The fact that Look North rolled out an incoherent Chadwick who mumbled some nonsense just makes the whole project look amateur.

I note that Doncaster (Foster and Hinchley) are down as now attending the Routes conference in Frankfurt this week. Another large amount of money down the drain to try drum up business for an airport that has no guarantee of even opening. The industry will laugh them out of the room with their absolute lack of knowledge.

Indeed, makes you wonder why MAI aren’t representing them again, clearly they didn’t get much bite when they went last year and probably imparted some home truths on their feedback report.

The low and base growth scenarios both seem to envisage no meaningful passenger flights ‘for several years’, the independent assessment shows that the low and base scenario are most likely to occur. I do wonder how that might go down with the Chadwick sycophants when they realise they have an open airport but are still subjected to the indignity of a 60 minute drive down the motorway? Public opinion can shift rapidly, Chadwick would be best advised to remember that.