Facing the Times: Airports convene at NAC, seeking answers to today's new challenges

Airline Bankruptcies
For most commercial airports, airline economics are directly tied to airport economics, a reason a session on airline bankruptcies at the NAC was in demand. Jeffrey Fine, a partner with Hughes & Luce, L.L.P., says challenges facing airlines include operating in a capital-intensive business; high fixed costs; too many stakeholders (labor, airports, lessors, pensions, etc.), and that oftentimes most equity value has been lost.

"Chapter 11 is being used by airlines to ... weed out costs," he says. He calls it an "unfair system" in which airlines in bankruptcy don't necessarily have to honor their financial commitments, while airports do. For example, an airline that has filed for bankruptcy protection is prohibited from paying most pre-petition obligations until a court has accepted its reorganization plan.

Fine also expresses concern about moves by United Airlines and others to back away from guarantees for bonds that have been used to finance facilities. It's a situation, he says, that could have "grave consequences" for U.S. airports.