AA: Servicing Site For New Jets Undecided

Oct. 23-- American Airlines hasn't made any decisions about where future versions of 737 and 787 jets will be serviced -- despite a union official's claim that the work is not headed to the company's Tulsa maintenance facility.

The issue is a key one for Tulsa County voters considering Vision2's economic development proposal because refitting the facility to accommodate 737s and 787s is a costly element of the package.

Jeff Pike, president of the Transportation Workers Union Local 567 in Fort Worth, said in a Sept. 16 story on KXAS-TV in Dallas that new Boeing 787 jets coming into the American Airlines fleet will be maintained by Boeing under an agreement American made with the planemaker, Pike said. New 737s being added to American's fleet also will be maintained by Boeing, he said.

Pike said he had been briefed on the airline's plans and that they included moving maintenance on Boeing 777 jets -- which had been done at Fort Worth's Alliance Airport -- to Hong Kong.

Attempts to reach Pike concerning his comments were unsuccessful, but a statement from the airline said the company hasn't decided where to maintain future versions of the 737 and 787.

"Neither aircraft type has a decided-upon maintenance program or provider of maintenance services at any level as of now," the statement says. "The 737 MAX and 787-9 do not even exist as a fully configured aircraft from Boeing yet.

"For the new 737-800s -- the ones we are taking now and into the future -- will be governed by the same maintenance program we use today."

Heavy maintenance for the airline's 737 fleet is handled in Tulsa.

Much of the Vision2 economic development package -- Proposition 1 of the two-part $784.8 million package, which would be funded with a 0.6 percent Tulsa County sales tax from 2017-2029 -- would be dedicated to improvements to the city-owned American Airlines maintenance facility.

Vision2 includes $60 million to build a next-generation engine test cell for the engines on 737 and 787 jets and $9 million for tooling and training on the next-generation engines.

It includes money to retrofit five of the facility's hangars to accommodate the high-tailed 737 at a cost of $2 million per hangar.

Vision2 co-Chairman John Smaligo said that while there are no guarantees about the bankrupt airline's future, Tulsa County voters should be assured that no money would be spent from the Vision2 proposal until enforceable agreements are in place with a tenant about a set number of jobs, payroll and longevity in the facility.

As a Tulsa County commissioner, Smaligo would serve on the county oversight panel that would determine how and when Vision2 economic development money was spent.

"I think that everybody involved is going to want to make sure we have agreements in place with whoever the tenant is at the facility before any money is spent improving the facility," he said.

The agreements would assure the county that a high number of long-term, good-paying jobs would continue at the maintenance facility, he said.

Similar enforceable agreements would be required of any company benefiting from money from the job-creation fund, he said.

Wichita helps Spirit AeroSystems through bonds

Some $59.5 million in industrial revenue bonds approved by the Wichita, Kan., City Council earlier this month to fund improvements to Spirit AeroSystems facilities there do not involve a commitment of public taxes or credit, but they do result in the loss of an estimated $13 million in tax revenues to schools and county government over 10 years.

After the Wichita bonds were approved, Tulsa leaders pointed to the move as evidence that other cities were taking steps to back their aerospace employers and said that if Tulsa doesn't approve the Vision2 package, those same cities would use incentives to lure Tulsa's aerospace jobs.

Allen Bell, Wichita urban development director, said the industrial revenue bonds will be issued by the city for Spirit and that the aerospace company will purchase its own bonds -- essentially lending the money to itself. The city's credit isn't on the line, and no tax money can be committed to paying for the bonds, he said.

However, the issuance of the bonds qualifies the associated improvements for a 10-year tax property tax abatement, he said.

Assuming that the tax valuation of the improvements is the same as the cost of the improvements, the lost tax revenue will be about $1.3 million a year for 10 years, he said.

Two-thirds of that cost will be absorbed by the local school district, and the rest will hit the county government, he said.

Since 2006, when Spirit AeroSystems was spun off from Boeing Co., the city of Wichita has issued approximately $400 million in industrial revenue bonds for Spirit, he said.

About Vision2

Election date: Nov. 6

Amount: $748.8 million

Tax impact: Extension of 0.6 percent Vision 2025 sales tax from 2017 through 2029

PROPOSITION 1: ECONOMIC DEVELOPMENT

Airport industrial complex buildings and infrastructure: $122 million

Airport industrial complex equipment: $132 million

Closing fund: $52.942 million

Bond costs and interest: $79.938 million

PROPOSITION 2: QUALITY-OF-LIFE IMPROVEMENTS

Tulsa County: $92 million

Tulsa: $157.92 million