Councils and an airport partner are set to share a windfall of £43million after Newcastle Airport announced a project to refinance its bank debt.
Newcastle International Airport Ltd has negotiated a new term loan facility of £233million, with the airport's overall amount of loan interest paid to be reduced.
Seven local authorities own 51% of the airport company, including South Tyneside Council, Sunderland City Council and Durham County Council.
The other 49% is owned by global investment manager AMP Capital, who are set to share a total dividend of £43million with the local authority shareholders.
It's the first time since 2013 that shareholders have received a dividend.
Coun Iain Malcolm, leader of South Tyneside Council, and chair of the LA7 Airport Holding Company, said “The completion of the refinancing is great news for the region.
"The airport has grown to become a very significant asset for the North East, contributing hugely to the economy, and providing the links that people and businesses need.”
The refinancing has been agreed well in advance of the expiry of the previous financing arrangements, which were arranged in 2012.
Since then, the airport has committed about £40million in capital developments, such as radar replacement and improvements to customer facilities and its retail offering.
The process has been carried out with the airport’s advisors, RBS Advisory (financial) and Allen & Overy (legal), and with support from AMP Capital and the local authority shareholders.
Financing is being provided by a consortium of lenders, which includes RBS, Commonwealth Bank of Australia, National Australia Bank Limited, ING Wholesale Banking, Development Bank of Japan (DBJ) and MetLife Investments.
The new facility will result in the airport paying a lower amount of interest each year after more favourable interest rate terms were negotiated.
The loan is split into tranches between seven and 20 years, which will offer enhanced protection against future interest rate rises and ensure continued investment to improve customer facilities and infrastructure, including a planned runway resurfacing.
Nick Jones, interim chief executive of Newcastle International, said “We are pleased to announce that our refinancing project has been completed.
"We have created a platform which allows the airport to continue to deliver the facilities, infrastructure and connectivity that the North East needs.
"The project will help secure the long term success of the airport by maintaining its sound financial footing and provides a new capital expenditure facility, which is available to support our growth plans.”
Since 2012, passenger numbers at Newcastle Airport have grown by 10%, from 4.4 to over 4.8million in 2016 (forecast).