Ross Kerridge ‘seriously concerned’ by Newcastle Airport’s debt scandal
By Simon McCarthy
Updated November 3 2024 - 3:10pm, first published November 2 2024 - 4:34pm
Lord Mayor Ross Kerridge says he will call for a meeting with the Newcastle Airport’s senior management after revelations the region’s key infrastructural asset was drowning in debt and looking for a potential ratepayer bailout.
The airport, which is jointly owned by Newcastle and Port Stephens councils, is teetering and in desperate need of a funding injection, and internal reports show staff repeatedly warned the organisation was in financial turmoil with no clear plan to fund major projects.
Cr Kerridge took to social media on Saturday and said the contrast between the airport’s public statements and what its own internal reports reveal “raises serious questions”.
“As Newcastle and Port Stephens residents are the ultimate owners of this vital infrastructure, they deserve clear and transparent information about its financial health,” he said.
"The potential consequences of any financial instability at the airport would directly impact our residents - our community shareholders - through increased rates, reduced community services, sale of assets, or raising charges to customers at the airport.
“It may also impact negotiations with potential industries or partners wishing to join the Newcastle Airport precinct developments. This does not, and will not ever, sit comfortably with me.”
“Our community deserves nothing less than complete transparency about the state of their airport.”
The crisis comes as a multi-million-dollar terminal expansion faces cost blowouts amid falling passenger numbers and unbudgeted spending for the Kongsberg missile factory and Lockheed Martin Air 6500 project.
The airport’s outgoing CEO Peter Cock has strenuously denied the airport was facing money problems, though, and has insisted that the organisation’s financial situation remains “robust”.
Newcastle Airport board chair Jude Munro has similarly denied the organisation is in hot water and has labelled the Newcastle Herald’s reporting on the subject as “sensationalised and inaccurate”.
When she, Dr Cock and the airport were asked to detail any misrepresentations, they declined.
“I am disappointed to learn that our commitment to good governance and ongoing risk management analysis has been misrepresented,” she said in a statement earlier this week.
"Our board of directors, known for their experience and expertise, passed a resolution and directed the airport leadership team for prudent management to maintain cash reserves of $15 million.
“This decision aligns with our best practice standards as a skills-based and risk-averse board.”
As the Herald revealed at the weekend, the airport’s loss-making property development arm, the Greater Newcastle Aerotropolis (GNAPL), appeared to be at the root of its problems and only survives due to cash injections from the airport’s general operations.
According to a financial deep-dive report from April, GNAPL is simply not viable, or “bankable”, as a standalone company yet. Falling passenger numbers following the collapse of Bonza and diverting millions in unbudgeted cash reserves to prop up GNAPL’s property developments have sparked insolvency concerns.
Insiders say there are fears the airport is being “bled dry” and needs an urgent bailout.
“I will be meeting with the airport’s senior management soon and expect these issues to be clarified,” Cr Kerridge said.
Customarily, directors from both the City of Newcastle and Port Stephens Council sit on the Newcastle Airport Pty Ltd (NAPL) and the Greater Newcastle Aerotropolis (GNAPL) boards. Former Lord Mayor Nuatali Nelmes and City of Newcastle CEO Jeremy Bath have retained their positions on the board until at least February next year in the interest of “stability” after the council voted on the matter earlier this week.
Councillors voted on Tuesday to keep Cr Nelmes and Mr Bath, whose fees for work as boards directors have risen to nearly $80,000 each per year, in the roles on an interim basis until a “merit-based” application process can be put together.
Cr Nelmes used her casting vote to appoint herself to the board in 2019 for a fee of $50,000.
The former mayor said there is a “huge amount of work” in the role and offered to mentor the person who is selected to take her place.
Cr Kerridge, who has declared a conflict of interest that would preclude him from sitting on the boards, absented himself from the vote.
Port Stephens general manager Tim Crosdale also sits on the boards, and newly elected Port Stephens mayor Leah Anderson has replaced the former mayor Ryan Palmer.
The details of this report are developing. It may be updated.