Bankruptcy Leaves Delta Owing Kentucky Airport $2.9M, Officials Say

HEBRON - The final liability to the Cincinnati/Northern Kentucky International Airport from this month's bankruptcy filing by main tenant Delta Air Lines will be about $2.9 million, airport officials said Monday.

At the monthly meeting of the Kenton County Airport Board, airport lawyer Wilbert Zeigler said that the airport is considering filing a claim in a federal Bankruptcy Court in New York to reclaim the money.

"We're looking at the possibility, but we still don't know what Delta will do," Zeigler said, adding that operations and legal officials from the airport were meeting this week with representatives from the Pittsburgh airport, which has been dealing with the ongoing US Airways bankruptcy.

The money in question is for landing fees, which are paid after the service is incurred. In this case, the bill for August fees was due on Sept. 20, five days after Delta and Erlanger-based subsidiary Comair filed for Chapter 11 bankruptcy protection. In addition, Northwest Airlines owes an additional $70,000. Northwest filed for bankruptcy on the same day as Delta.

While Zeigler said going to court was an option, he also said that Atlanta-based Delta could repay the money when it emerges from bankruptcy.

Or the airline could renege on its agreement, which would put the airport in line with other creditors for the fees. Since those are considered unsecured debt, the fees would be some of the last bills paid if there were any money left.

But Zeigler said that such a move was unlikely, since it would leave Delta without any say on how the local airport is run. Only airlines that sign use agreements, called "signatory airlines," have input on local operations and budgeting. Such agreements usually grant lower landing fees than are paid for individual flights.

"That would probably be unwise on their part," Zeigler said.

Delta spokeswoman Benet Wilson said that the airline has made no announcement on any of its agreements at any airport.

Airport officials also said that the shortfall in landing fees would be more than made up by a $6 million-plus surplus in the budget because of higher parking and concession revenues. The $2.9 million represents about 3 percent of the airport's total budget of about $97 million for 2005.

Meanwhile, the precise impact on the airport's finances from Delta's pending 26 percent service cut on Dec. 1 has not yet been determined. Airport Executive Director Robert Holscher told the board that a hiring freeze was under way for airport staff, and cost-cutting and revenue-generating ideas were being formed.

Zeigler stressed that the airport was not liable for about $450 million worth of bonds issued on behalf of Delta to build Terminal 3. While the airport helped issue the bonds, they were drawn against Delta's debt. Those bonds were issued in 1992.

In other airport news:

The board approved an additional $40,000 to help move two unused electronic bag-scanning machines to Terminal 3 to help ease a backlog that has created delays and mishandled bags. Initially, the airport was to pay $30,000 to help Delta, but the financially struggling airline said it could not spend any more money.

"This is a serious customer service issue, and will benefit all passengers, not just Delta," said airport Deputy Operations Director Chad Everett.

The airport finance committee is considering imposing a $3.75 per day customer facility charge on rental cars, to help fund a new $60 million project that would create a central pick-up/drop-off point for shuttle buses at Terminal 3; a new consolidated rental car area on the west side of the airport; and new roadways to ease connections with Interstate 275.

Construction could start late next year or in early 2007. The charge is being considered to help keep borrowing to a minimum. Similar charges are imposed at 48 airports nationally.



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