Audit report says Prestwick Airport in Scotland needs further state help

23 February 2015 (Last Updated February 23rd, 2015 18:30)

A report released by Audit Scotland has revealed that the cost of bailing out Prestwick Airport has gone up to £39.6m from the initial £21.3m, with a chance of the cost rising up further.

A report released by Audit Scotland has revealed that the cost of bailing out Prestwick Airport has gone up to £39.6m from the initial £21.3m, with a chance of the cost rising up further.

The struggling airport was purchased by the Scottish Government for just £1 from owners Infratil in late 2013.

The government then had six weeks to take the decision amid fears of losing jobs in the event of the airport's shut down.

In its report, Audit Scotland said that during the purchase of the airport, the government acted reasonably as it had to conclude the deal under a tight timescale of six weeks.

"Our report recognises that the purchase of Glasgow Prestwick Airport was carried out to a tight deadline and in uncommon circumstances."

However, the report also said that while it established appropriate governance arrangements and identified the risks associated with the airport's ongoing commercial viability, it wasn't clear in areas such as anticipating the potential withdrawal of Ryanair and fully quantifying the economic benefits of the purchase.

Auditor General for Scotland Caroline Gardner said: "Our report recognises that the purchase of Glasgow Prestwick Airport was carried out to a tight deadline and in uncommon circumstances.

"The Scottish Government and Glasgow Prestwick Airport should now ensure that a clear strategy is put in place, which takes into account future development potential and includes robust business and financial plans, full evaluation of potential risks and a well-defined, regularly reviewed exit strategy."

Until January, the government provided the airport with a loan of apporximately £9m with £16.2m to be granted by the end of March 2016.

The report estimates that the airport will need financial assistance of roughly £39.6m up to the financial year 2021-22.

Established in 1934, the airport had been incurring losses due to falling passenger numbers and a decline in freight business.