American Airlines Finally Starts Repairs in KC

Dec. 22--It's taken a year longer than Kansas City officials wanted, but American Airlines has begun work on dilapidated portions of the massive maintenance base at Kansas City International Airport.

The first phase of the project involves upgrades to the narrow-body hangar used by American. That will involve repairing two passenger elevators, one freight elevator, a hangar door and the roof, said John Hotard, an American spokesman.

"We've started," Hotard said. "Things are moving in the right direction."

For city officials, the work being done has been a long time coming.

After American signed a long-term lease to keep operating the overhaul base, the Kansas City Council approved the issuance of $32 million in revenue bonds to pay for the work. The bonds were part of a $41 million incentive package provided by the city and the state of Missouri to get the renovation done on the city-owned base.

The council's approval had come in July 2005, and American had said it hoped work could begin by fall 2005.

That didn't happen, and the delay continued through most of 2006. Several weeks ago, Mark VanLoh, the city aviation director, updated the council's Aviation Committee on the lack of progress with American on the facility's upgrades.

"We have $32 million sitting in the bank with arbitrage issues if we don't start spending that money," VanLoh told the committee. "We want to keep them (American) as a tenant, because those jobs are important. But we're just getting a little frustrated" with the airline's inactivity.

This week, VanLoh said American appeared to be making progress.

"There's finally been some movement," VanLoh said. "It appears they're gearing up to do some work inside the facility. The roof repair can't be done till the spring, but we were hoping they wouldn't waste the winter on things that could be addressed inside the hangar."

The hope of the city is that the improvements at the base will help American grow its maintenance work and its employment there.

American employs more than 900 people at the maintenance base, one of three operated by the airline.

Although many airlines have outsourced their maintenance work, American has gone the other direction and is trying to find third-party maintenance for all three of its bases. The goal of the Kansas City base is to create $150 million in additional value through cost savings and outside work.

Most recently, American secured a contract with Alcoa Inc. 's air-cargo services unit to work on its aircraft at KCI. As a result, Alcoa-SIE Cargo Conversions moved its headquarters to Kansas City.

This week, American's biggest maintenance facility in Tulsa, Okla., secured a four-year, $30 million contract with Allegiant Air to work on its fleet of MD-80 aircraft.

Work finally is getting started on the needed repairs at the base. Hotard said the repair of a passenger elevator was expected to take six weeks, and would be followed by work on the other elevators. The upgrade to the hangar door won't begin till mid-March, he said.

The engineering work on the roof-repair project has begun and the work will start in late March or early April, according to Hotard. That project won't be completed until near the end of 2007.

The second phase of the renovations will be on a superhangar used for wide-body planes.

Much of that work will involve the same things, such as elevators, the hangar door and the roof, Hotard said.

American officials last week gave a tour to officials from the city engineering department to show what would be done to the superhangar.

"The timeline on that work goes through 2007 and beyond," Hotard said.

VanLoh said all the bond money must be spent by July 2008.

"We don't anticipate that being a problem at all," Hotard said.

One issue that remains between the city and American is the overhaul base's utility and wastewater treatment plant. The city took over the operations of the facility last December. Since then, VanLoh said, the city has invested millions of dollars upgrading it.

"When we took over the facility a year ago, it was a mess," he said. "We had to do a lot of engineering work, and we've replaced a lot of equipment."

Although American pays its monthly utility bills, VanLoh said the airline owes nearly $4 million for work that has been done on the plant.

American said it is talking to the city about the amount owed on the utility plant upgrades.

"We've disputed some of the billings, and we're not going to say anything beyond that," Hotard said. "We continue to work with the city on it."

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