St. Johns

How much will St. John’s have to borrow to keep operating? “A lot”

Airport projects four years of borrowing to pay for operations

Empty departure lounge at St. John’s International Airport (photo: Atlantic Canada Airports Association).

Tom Williams, the Chair of the St. John’s Airport Authority was close to wrapping up his airport’s annual general meeting when he was asked the question on everyone’s mind: how much would the airport have to borrow just to keep the lights on?

“That’s a great question,” he answered. “A lot.”

Williams and his finance chair had just laid bare a bleak outlook for the airport due to the COVID-19 pandemic, and there was no sugar coating the news.


“This is the single most significant challenge we have ever faced as an airport authority,” said Roger Butt, the Chair of the Finance and Audit Committee. “We will have to be operating at a net loss for the next few years.”

The swing is dramatic. After posting net revenues of more than $3 million in 2019 (as non-profit entities, airports rarely use the word profit), St. John’s International projects it will have to borrow $20 million this year just to maintain operations.

During the pandemic, flights have dropped from 80 a day to as few as eight, and passenger numbers have dropped 95%, a typical figure among Canadian airports. The airport is projecting just 387,000 passengers this year, down from 1.5 million.

That has had a devastating impact on the airport’s revenues, which are projected to drop 70% this year.

With no recovery in sight, the airport projects at least four years of losses before it can balance the budget once again, though Williams conceded the financial projections were in “a state of flux.”

“It will take us years to recover from this pandemic,” said Butt, projecting the airport doesn’t expect to break even until 2024. Airports in Canada are private entities, required to raise their own funds through fees to pay for operations and capital expenses.

The airport’s estimate came the same day that a Member of Parliament raised the spectre of airport bankruptcies in the House of Commons.

“Canada’s airports are teetering on the brink of bankruptcy,” said Michael Kram, the Conservative member for Regina-Wascana, “and the Liberal government’s response has been to defer their lease payments, which were already based on revenues, so these deferrals are effectively meaningless.”

Early in the pandemic, Ottawa forgave lease payments it charges to Canada’s airports for the Crown land they sit on. It said the move would save airports more than $300 million, though since the lease charges are tied to airport revenues, the actual amount is much less. The largest eight airports pay 96% of the national land lease.

Across Canada, the Canadian Airports Council expects airports to lose in the range of $2 billion in revenue this year.

“The loss of the Regina International Airport would be devastating, not only to the city of Regina, but to Southern Saskatchewan,” said Kram, asking the government to save airports through a programme of grants and loans.

“We know that there are some circumstances where continued operation at those smaller airports has not been possible,” said Minister of Public Safety and Emergency Preparedness Bill Blair. “But wherever possible we have done our very best to accommodate the very real financial challenges that the airports are experiencing.”

How much will @StJohnsairport have to borrow to keep operating? “That’s a great question. A lot.”

In St. John’s, Board Chair Williams said the lease forgiveness was of little help, since the airport wouldn’t owe much this year in any case.

At the same time, federal wage subsidy of up to $847 a week has helped the airport avoid layoffs – for now. But there is no guarantee for the future, he said.

“We will not be able to continue our operations without relying on borrowed funds,” he said.

In the meantime, he said a planned renovation and expansion of the arrivals area has been shelved indefinitely as a cost-cutting measure.

Williams told the virtual audience – the first time the airport has held its annual public meeting this way – that there was no indication of any federal relief being put into place for airports, despite ongoing communications across the country.

“We are hopeful,” he said. “You always live in hope.”

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