The international airport has gone from 151 flights a day to eight tracked departures in a week
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Having 'furloughed' 80% of staff a Bristol Airport spokeswoman said that the COVID-19 event is 'a dynamic situation and further reviews and difficult decisions may be necessary to protect the business for the future'. She went on to say that they will be 'scaling back recruitment, and consolidating the operational facilities of the terminal'.
Dave Lees the airport company CEO said that the risk to the industry should not be underestimated. He cited previous challenges such as volcanic ash and terrorism but said that COVID-19 will have far-reaching repercussions.
When asked whether the current crisis would have a bearing on an airport appeal against the local authority's rejection of their expansion plans the airport spokeswoman merely said that the rejection 'risks putting the brakes on the region’s economy and shutting the door to international trade and tourism at a time when the UK needs to show it is open for business'. She went on to say that the airport will review the local authority's reasons for refusing the application and then make a decision on their next steps.
Prior to the COVID-19 pandemic it seemed a certainty that the airport would appeal to the Planning Inspectorate and have a good chance of success, although because of the Green Belt issue the final decision would be taken by the secretary of state.
Events might now make an appeal and the outcome of one less certain.
We don't know the stance the government will take with regard to climate change post-COVID-19. There might be political imperatives to soft-pedal a bit on aviation expansion, particularly airport expansion, after the apparent substantial improvement in air quality that the worldwide massive reduction in flying and vehicle traffic has brought about.
We don't know either how pension funds such as the very large one (OTPP) that owns BRS will view airports in the future. BRS has certainly proved an excellent investment for its various owners since fully entering the private sector nearly 20 years ago.
The danger in not appealing the planning rejection is that if within, say, the next 3-5 years aviation recovers and continues its march forward BRS might find itself scrambling to keep up and might have to submit a brand new planning application to the local authority which the present political make-up would be likely to reject again, and an appeal against that rejection could be several years off the pace, even if successful.
A radical step would be for OTPP to sell the airport but in the present circumstances how much would they get for it?
One broad brush means of estimating airport values is using a multiple of EBITDA. In recent years many airport values have been rising substantially, with some airports being sold at eye-watering EBITDA multiples - London City for example went for something like 30 x EBITDA (with OTPP part of the purchasing consortium).
Pre-COVID-19 a 15 x EBITDA multiple for BRS might not have been an unreasonable estimate which, if based on its financial year ending December 2018 (the latest year to be in the public domain), would mean 15 x £55.8 million = £837 million, but COVID-19 will no doubt play havoc with current airport valuations. EBITDA is only a guide anyway, particularly if based on the latest year's financials which could be atypical at some airports.
Selling BRS now or before the full COVID-19 effects on aviation become much clearer might lose its owners a considerable amount if the airport was sold for a song and then the aviation outlook changed for the better going forward. In 2001 when BRS was fully privatised it was sold for just under £200 million.
I'd be extremely surprised if the owners don't retain their investment and I still anticipate an appeal against the local authority's planning application rejection.
