Infrastructure investor, Infratil, is cutting its losses by essentially giving its Glasgow Prestwick Airport to the Scottish government.
. Photo: afp
Infratil bought two-thirds of the Prestwick airport in January 2001 for £33.4 million and then bought the other third in December 2003 for £11.7 million.
Infratil says it expects the due diligence and negotiations to be completed by 20 November and that it does not expect to make any money from the deal.
The Prestwick and Manston Kent airports lost $9.9 million at the operating level in the 12 months to the end of March when Infratil wrote down their value by $53 million.
Infratil says it recognises the importance of the airports to their local communities and it wants the new owners to support their future success.
Infratil chief financial officer Kevin Baker says his company has been forced to face the reality of the Prestwick airport's poor performance.
He says the airport has suffered from the global financial crisis, the recession in the UK and carbon taxes that have been put on UK domestic markets.
Mr Baker says the last four or five years at the airport have been very tough.
"We worked incredibly hard to try and turn it back to profitability but you do have to face reality after a number of years of very, very poor results - so we are facing that."
Mr Baker says he can't be drawn on the possibilities for Kent Airport although it has been running through the same sort of sale process and timetable as Prestwick.
He says his company still has the airports valued at about £11 million and expects to write that off in its accounts for the six months to the end of September.
Forsyth Barr analyst Andrew Harvey-Green says it will be a positive for Infratil just to be rid of the Scottish airport and the European airport experience has not been a good one for the infrastructure investment company.
