Credit Analysts Not Worried About Pullback at D/FW

Dec. 17--As Dallas/Fort Worth Airport officials are stressing over the financial plight caused by American Airlines' announced pullback of flights this week, airport credit analysts said the problems aren't that bad.

"At this point, we're watching the developments with the Wright Amendment and American's response," said Peter Stetler, senior director of Fitch Ratings, which grades D/FW's ability to pay off its $3.8 billion debt as an A+. "At the short term, we don't think it has any immediate effect on the airport. ... American is going to stay largely on the hook for the cost of D/FW at this point, even if it does shift the flights."

Fort Worth-based American told airport officials in a letter Tuesday that it would drop 31 flights to 13 cities. American said it cut the "lower performing routes" to shift airplanes to Dallas Love Field and compete with Dallas-based Southwest Airlines on newly legal routes to Missouri. Starting March 2, American will add 16 departures from Love.

Beginning in February, American's winter schedule at D/FW will gradually drop by 6 percent to 484 daily flights.

Laura MacDonald, a credit analyst at Standard & Poor's, said American's reduction is not too much of a concern because it's small compared with the carrier's overall number of flights at D/FW.

"It adds pressure to D/FW in terms of their costs, especially at a time when they've opened a new terminal and Delta has pulled out," MacDonald said. "It's clearly not a positive development. If it leads to more states, then it's more of a cause for concern."

Kevin Cox, chief operating officer at D/FW, said in a prepared statement Tuesday that the pullback served as a "solemn and ominous warning" to anyone who wants to open Love Field to more flights. "These are very real and serious economic consequences for all of North Texas."

Cox said in a phone interview Friday that he wasn't trying to indicate that the airport won't be able to pay off its debt because of American's pullback.

"Is it going to make us not competitive? No," Cox said. "We will continue to pay our bills, and we'll work to try to attract traffic. What it does have is an immediate impact on concessionaires." In the airport's last fiscal year, which ended in September, concessions sales netted D/FW $33 million, its third-highest revenue source.

Cox disagreed with credit analysts, saying that the cutback is significant.

For comparison, he said it would be like shutting down all passenger flights out of airports in Amarillo or Lubbock, or cutting in half the service at Oklahoma City's airport.

"When people sit there and go 'It's only 31 flights,' they don't appreciate what 31 flights represents," he said. "People would kill to get 31 flights."

David Wethe, (817) 685-3803 dwethe@star-telegram.com

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