United Airlines dominates Denver International Airport, providing more than 60 percent of the airport’s airline revenue last year. Because of that critical economic link, Denver officials are closely watching the carrier’s attempts to exit bankruptcy.
“The financial stability of DIA still remains tied very closely to United, whose connecting traffic was 38 percent of the total traffic at DIA in 2004,” said a Moody’s Investors Service report in August.
“Denver’s financial position has remained relatively stable despite the stresses in the airline industry and with United,” the report continued.
It also has remained stable despite the risks involved if United were to liquidate or pull out of Denver.
Airport revenues would be reduced and other airlines’ costs would be increased if United liquidated, according to the Moody’s report.
Attracting another hub carrier to take United’s place at DIA would have cost as much as $65 million, said Tom Clark, executive vice president of the Metro Denver Economic Development Corp.
He estimates about 23,000 Denver-area jobs – and $911 million in annual salaries – are either at United or dependent on United.
United chief financial officer Jake Brace said he hopes United will “find reason to add (flights)to Denver and grow the employee population. We are expecting Denver to be a hub for a long time.”
DIA officials also assume the airport will remain a system hub for United.
In 2003, DIA negotiated with the bankrupt carrier to resume its DIA use-and-lease agreement. In the agreement, Denver forgave $13.6 million in pre-Chapter 11 debt and agreed to do four things: expand Concourse B to create a regional jet facility for United; reduce United’s total space; add capital improvements to taxiways, gates and ticket counters; and reduce $83 million to $133 million in airline rates and charges.
United is current with payments to DIA and will continue to operate under the existing agreement, Brace said.
DIA officials said in July that they plan to pay United $10 million to buy two gates on Concourse A.
The payment will be in the form of a credit against United’s debt for the automated baggage system.
Frontier has inquired about leasing the gates.
DIA also agreed to install jet bridges for the regional jet terminal and make baggage-system improvements.
Separately, a dispute between United and the city and county of Denver about the classification of $7.4 million for United’s 2002 personal property tax has not been resolved yet.
A ruling is scheduled for Oct. 21, but negotiations for a settlement have begun.
“We’re going to try to get everything that we’re entitled to,” said city attorney Cole Finegan.
Staff writer Kelly Yamanouchi can be reached at 303-820-1488 or kyamanouchi@denverpost.com.
Reorganization plan confirmation schedule
Oct. 11: Disclosure statement hearing
Dec. 1: Plan objection deadline and voting deadline
Jan. 17: Plan confirmation hearing begins; a trial could last through Jan. 20
Litigation schedule
Dealing with Pension Benefit Guaranty Corp. and 9/11 claims and employee distributions:
Oct. 7: Deadline to file objections
Nov. 18: Pre-trial conferences
Jan. 4-10: Potential hearing dates for any objections to PBGC claim, employee distributions or 9/11 claims
