Despite snowstorms, DIA landed record profit in '06

Sept. 21, 2007

Denver International Airport took a hit from last December's consecutive snowstorms, which stranded thousands of passengers and snarled air traffic nationwide.

But it wasn't enough to slow the airport financially.

DIA reached a record profit in 2006 on a huge spike in passengers fueled by low fares, new service and the arrival of Southwest Airlines.

"To post record net revenues . . . while covering the significant financial impacts of back-to-back blizzards shows the strength of our revenue streams and ability to control costs," DIA manager Turner West said.

The airport's net income hit $62.5 million last year, according to DIA's latest annual financial figures. That compares with a $44.5 million loss in 2005, which was tied to a massive write-down of United Airlines' faulty automated baggage system. Without those charges, DIA would have posted a $40.5 million profit in 2005.

Officials attributed last year's solid financial performance to a 9.1 percent increase in passengers, which helped lift revenues gleaned from concessions, rental cars and parking. That allowed the airport to return $40 million to the airlines under a revenue- sharing agreement.

Still, overall airport revenues increased by just 1.3 percent, far less than the rise in passenger traffic.

Much of that was because of the baggage system agreement with United, which reduced the carrier's airport rates. DIA also saw a 25 percent dip in aviation fuel sales, primarily because airlines bought in other cities where it is cheaper to fill up.

"If the pipeline comes here from Texas, for example, you can buy fuel a lot cheaper there on a stopover," said Stan Koniz, DIA's chief financial officer.

The airport's operating income more than tripled, even though expenses jumped because of nearly $7 million in additional costs related to the December storms and money spent on additional security after last summer's liquid explosives scare.

Some observers applauded the strong profit numbers but cautioned that DIA has some big expenses coming, including more than $1.2 billion in planned upgrades and expansion projects. The airport also is spending millions to bolster its snow-removal program.

"Though it looks like a good profit today, that money will be used very quickly," said Denver City Council President Michael Hancock. "We've got to be prudent in how we handle surpluses while we have them."

The airport benefited last year from the arrival of Southwest, which started service in early 2006 and added more flights and destinations. Southwest put pricing pressure on other airlines, forcing them to lower fares on competitive routes. That helped entice more people to travel.

Denver-based Frontier Airlines also continued its rapid growth, and the city's dominant carrier - United - added some flights after years of cutbacks.

DIA's financial success has spilled into 2007. In this year's first quarter, DIA reported a solid profit and a continuing uptick in revenues.

INFOBOX

Ups and downs

DIA's annual net income or loss since 2000

2006 + $62.5 million

2005 - 44.5 million

2004 + $31.7 million

2003 + $5.7 million

2002 + $51.1 million

2001 - $120.8 million

2000 + $4.2 million

Source: Dia Financial Reports