Shuttered Denver's Tab Deep as Snow

After the 2003 blizzard, DIA saw a "significant increase" in overtime that led to more than $1 million in extra costs.


United Airlines and Frontier Airlines stand to lose millions of dollars from flight cancellations and added expenses tied to Wednesday's blizzard, some observers estimate.

Denver International Airport - which closed Wednesday for the first time since 2003 - will take a financial hit as well, losing out on hundreds of thousands of dollars in landing fees and other revenues.

But observers say the airlines and the airport could sidestep a severe blow if the snow abates at some point today as expected. This is just one of many heavy snowstorms that have hit the region over the years, and the local aviation industry prepares for such disruptions as a part of doing business here.

"It's really too soon to tell what will happen to these two airlines financially," said Henry Harteveldt, a vice president at Forrester Research in San Francisco. "If the storm ameliorates and Denver gets back to normal quickly, I think there will be a relatively minor effect."

The blizzard forced DIA into a standstill as airlines canceled all departures and arrivals by early afternoon. The airport doesn't expect to re-open until this evening, meaning hundreds more flights will be canceled.

Frontier and United are particularly exposed to the effects of the blizzard. Both carriers have major hubs here, handling more than 75 percent of DIA's passengers.

Frontier routes nearly all of its traffic through the airport, meaning it has limited options for getting passengers to their destinations. On Wednesday, it canceled 250 arriving and departing flights, representing more than 80 percent of its scheduled service in Denver.

The carrier will lose some revenue typically gleaned from last-minute passengers, and overtime pay likely will swell significantly. Most ticket revenue, though, is deferred because travelers will rebook on later flights.

Still, the financial impact could hit a couple million dollars, said Evergreen aviation consultant Mike Boyd.

That's not exactly welcome news for a carrier already facing some financial challenges this quarter. Frontier recently lowered its quarterly forecast from break-even to a loss, citing a slowdown in demand and high fuel costs. A huge blizzard in 2003 that forced a two-day shutdown of DIA caused Frontier to cancel 371 flights. The carrier went on to record its largest-ever quarterly loss, which Frontier pegged on both the storm and the war in Iraq.

United - Denver's largest airline - could take a $10 million hit, Boyd estimated. DIA is the carrier's second-largest hub.

"Their fleet is all screwed up and their crews are in the wrong places now because of this storm," Boyd said.

Still, a couple million dollars is a drop in the bucket for an airline the size of United. And one analyst said she isn't concerned about how the storm will effect United or Frontier from a financial standpoint.

"We build events like this into our earnings forecast, and I think the airlines generally do as well," said Helane Becker, an airline analyst with Benchmark Co. in New York.

DIA likely will see added expenses and lost revenue. Through the first six months of the year, the airport averaged roughly $278,000 in landing fees each day.

After the 2003 blizzard, DIA saw a "significant increase" in overtime that led to more than $1 million in extra costs, according to the airport's financial report from that year. DIA, though, recouped 75 percent of that from the Federal Emergency Management Agency.

Any financial impact should be minor blip for an airport that generated $450 million in operating revenues last year. DIA also might have seen a boost in concession revenue Wednesday.

"In general most airports know that weather events like this are a possibility," said Peter Stettler of Fitch Ratings. "These things usually don't upset the apple cart too much."

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