The UK’s Birmingham Airport will receive an £18.5m emergency loan from the city council to help it ward off an insolvency threat.

The airport has witnessed a 91% drop in passenger traffic due to the pandemic.

The new loan arrangement was approved by the cabinet group on 9 February after the councillors were told about the airport’s ‘severe downturn’, reported the BBC.

Given the ongoing uncertain conditions of the aviation industry, some councillors questioned whether more funding will be needed further down the line.

Birmingham City Council is one of the seven local authorities in the area that are stakeholders of the airport’s holding firm BAHL.

Although all were approached for financial support, around four local authorities and Ontario Teachers’ Pension Plan agreed to contribute to the loan, LDRS reported.

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While questioning the loan’s amount, councillor Meirion Jenkins suggested that councils had ‘no choice’ but to approve the loan.

Birmingham City Council leader Ian Ward replied that the airport has chosen a conservative approach for recovery and is ‘reasonably confident this is a number that we will not have to revisit’.

He said: “The risk here if we don’t put this loan in and ensure the liquidity of the airport is that we would lose control of the airport as seven metropolitan authorities. I think it is in the interests of all of the West Midlands authorities and the people across the West Midlands that we do continue to exercise influence over the airport.”

On the other hand, the airport said that it is working to preserve cash and manage expenses, including suspending capital projects and using the government’s Job Retention Scheme.

A spokesperson of the airport was quoted by BBC as saying: “Any support is very much welcomed as the airport deals with the ongoing impact of Covid-19 and rebuilds post-pandemic to support the region’s economic recovery and air transportation needs.”

Last week, Birmingham Airport launched a rapid testing centre in collaboration with ExpressTest, a division of Cignpost Diagnostics.

The testing centre, which opens from 10am to 6pm, offers quick and accurate lateral flow and PCR testing to staff, the general public and passengers.