United Airlines, Denver Airport Reach Deal

United Airlines would schedule more flights through Denver as part of a tentative deal that would erase $184 million in its debt payments on a failed automated baggage system.


United Airlines would schedule more flights through Denver as part of a tentative deal that would erase $184 million in its debt payments on a failed automated baggage system.

City Council still must approve the deal between the airline and Denver International Airport.

The deal is likely to be attractive to the City Council because United's traffic at Denver International Airport has been declining.

"This prevents them from diminishing the importance of the Denver hub in the United system," Stan Koniz, DIA's chief financial officer, said of the agreement.

The bankrupt airline has been weighed down by $60 million in annual payments on the baggage system, which became the butt of late night television jokes for mangling luggage. United jettisoned the system Oct. 6 after years of using it only for luggage going from ticket counters to planes.

United had asked the city of Denver to build the system, which still carries about $600 million in debt.

The tentative deal announced Friday reduces the debt while securing a promise to bring more connecting passengers - and passenger fees - to the Denver airport.

United has pledged to board 7.7 million travelers by 2008, the same number of connecting passengers as United moved through DIA in 2004, said Koniz.

The airport planned to absorb the $184 million in erased debt payments with the passenger fees, cash it has accumulated, and savings from recent bond refundings.

The tentative deal also cancels construction of a regional jet facility that DIA planned to build for United, saving the airport about $2 million a year for each of the remaining 20 years on United's airport lease. United's other gates can handle growth in the use of regional jets, airline spokesman Jeff Green said.

United hopes to emerge from more than three years in bankruptcy Feb. 1.


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