Airline Bankruptcies Blow Hole in Atlanta Airport Budget

The bankruptcies of Delta and Northwest airlines are costing Hartsfield-Jackson $4.2 million as both carriers move to dump hangar leases.


Jan. 26--The bankruptcies of Delta and Northwest airlines are blowing a $4.2 million hole in the Atlanta airport's budget as both carriers move to dump maintenance hangar leases.

Delta Air Lines this week told workers it planned to close its "Delta North" maintenance hanger -- once used by Eastern Airlines -- in part because more work would be done by outside contractors. If Delta's bankruptcy court judge approves, the company soon will stop paying $3.4 million a year in rent to the airport.

Add to that the outdated Northwest hangar, empty since the Minnesota-based airline closed its Atlanta maintenance operation in 2003. Northwest, also in bankruptcy proceedings, got court permission last month to stop paying $802,159 in annual rent, said airport spokeswoman Felicia Browder.

Hartsfield-Jackson International's total revenue in 2004 was $273 million.

Although the airport can absorb the losses, general manager Ben DeCosta said he would have to revise his budget.

"I've got to figure out how to handle the loss of rent on the building, plus I have to safeguard our property. I have to hire security and pay the light bill," he said. "This is an unanticipated change in my budget that I now have to deal with."

DeCosta said he wouldn't fight Delta's request to cancel the lease on its north-side hangar.

This is the first time Delta has asked to cancel a lease at Hartsfield-Jackson, its primary hub.

DeCosta said he was surprised to learn of Delta's plans. "I didn't anticipate it, but in a bankruptcy like this, they have to think of every way they can to save money, so nothing should really surprise us," he said.

Airport officials have maintained that Delta's financial troubles would have little impact at Hartsfield-Jackson. Last year, Standard & Poor's reaffirmed its "A+" and "A" ratings on bonds sold to finance airport work. But the firm added that the airport faced a "heightened credit risk" because of Delta's "uncertain long-term prospects."

When DeCosta stopped design work on a new international terminal last year, the designers claimed he was mainly concerned about Delta's financial state, although DeCosta denied that.

Hartsfield-Jackson isn't alone in having empty maintenance hangars, said David Beckerman, director of consulting for BACK Aviation Solutions in Washington.

Atlanta simply had the bad luck to own hangars used by two bankrupt carriers, he said.

Delta battled hard to get into the facility it's now abandoning. It first tried to buy the lease from Eastern's bankruptcy estate in the early 1990s, only to have the city take control instead. Then-Mayor Maynard Jackson contended Delta would be assuming below-market lease terms, which the airline at the time refused to renegotiate.

By 1997 the city had worked a new deal with Delta, and the airline has since used it to augment space at its main maintenance complex on the east side of the airport.

That was during a time of "massive expansion" at Delta and was an effort to keep the hangar out of the hands of rival AirTran Airways, Beckerman said. AirTran has since occupied a new hangar adjacent to the old Eastern complex.

Now, Delta is cutting domestic flights and has less need for the facility, he said.

Some airports have been able to adapt airline hangars for use by small general aviation companies, or lease them to third-party maintenance firms, Beckerman said.

Hartsfield-Jackson hasn't given much thought to what it will do with Delta's hangar, DeCosta said, since it learned only recently about Delta's plans to move out.

But the airport is talking with an airport contractor about moving some of its employee parking to the parking lot of the Northwest hangar, freeing up about 1,200 parking spots adjacent to the airport. They could be turned into much-needed, revenue-generating customer parking spots.

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