American Airlines Puts Nearly a Half-Billion Dollars of Building Projects on Hold in North Texas

American Airlines will delay construction on a $250 million hotel and conference center project at its corporate headquarters in Fort Worth as it tries to preserve cash and look forward to a period of lower demand in the air travel industry.

“We’ve temporarily paused construction on our Fort Worth campus,” said American Airlines spokeswoman Annie Lorenzana. "We will continue to evaluate this project, as we do all capital investments, within this current environment.”

American, which has already frozen hiring, cut contractors and offered buyouts to thousands of employees, is planning to cut as much as $700 million worth of non-aircraft capital spending this year, CEO Doug Parker said in an investor conference last month.

The new conference center and hotel had been described as the “heart” of the overhauled corporate campus that also featured a new operations center, technology building and corporate headquarters building. The two buildings will have a total of 620,000 square feet and include office and retail space along with 600 hotel rooms. It will also have restaurants, a 131-square-foot conference and training center and a tavern for employees to social after hours and during events.

The training and conference center and hotel complex were intended to be one of the jewels of the campus, one of the few places intended for the 88,000 American Airlines employees that don’t work on the property. The company hoped to train flight attendants at the new facility and host large corporate events, replacing outdated buildings that had been there for more than 50 years and rented space at local hotels and conference centers.

The projects were part of a building spree before the pandemic by American and its North Texas rival Southwest Airlines.

For American, construction has already started on the buildings, but the COVID-19 pandemic has come swiftly and brutally for airlines. American said it will burn $40 million to $70 million a day during the second quarter as demand has shrunk to less than 20% previous estimates.

“The real focus here is how do we get our costs down, how do we get them into that level with zero revenue and how low can we get it with zero revenue and that’s what the team is working on and making sure that that’s the process we go through from a cost perspective, to stop everything we don’t need to do, slow every bit of [capital expenditures] that we have out there, not take any aircraft deliveries that don’t have any financing so cash doesn’t go out the door,” CFO Derek Kerr said at a recent investor conference.

The company has also put a hold on construction of a new $100 million flight kitchen at DFW as well as a $100 million parts distribution center. The flight kitchen was intended to help alleviate overcrowding at the facility at DFW. The old flight kitchen, operated by contractor LSG Skychefs, was blamed for 2,300 delays on American flights in the summer of 2019.

The parts center, also at DFW, is designed to help American Airlines streamline daily overnight repairs on airplanes at dozens of airports across the country. Today, those parts are stored at a variety of facilities across the country. But with the growing importance of the DFW hub, American said its easier to store those parts in North Texas and dispatch repairs. The completion of that project is being pushed back by six months to December 2021.

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