Beracha Drafts Team to Tackle Lambert-St. Louis International Airport's Woes

March 2, 2004

Beracha Drafts Team to Tackle Airport's Woes
St. Louis Business Journal, MO


The worst-case scenario for Lambert-St. Louis
International Airport just got worse. 

When the mayor's task force released its report Feb.
16, it projected passenger volume through 2009 would
be more than 40 percent lower than figures outlining
the worst-case scenario in the 2003 airport bond
financing documents. 

Peter Stettler, a bond analyst and director of public
finance at Fitch Ratings in Chicago, said that falling
passenger volume is not the first concern of the bond
rating agency. He's more concerned about the progress
of construction on runway expansion. 

"This is the type of thing that concerns us more going
forward. If there are considerable cost overruns or
delays, that might have an impact on the service of
debt related to it," Stettler said. "We'll look at
what the airport's actual experience has been once we
get more of a track record." 

Fitch currently rates the airport bonds at BBB+, which
has not changed since October. Moody's Investors
Service rates the bonds as A3 and Standard and Poor's
rating is BBB+. 

While Stettler isn't fazed by the projections, the
declining number of passengers through the airport is
a major concern for Barry Beracha, former chief
executive of Sara Lee Corp. In fact, increasing
passenger counts by marketing the airport to new and
existing airlines is one of the task force
recommendations that Beracha will be carrying out in
his volunteer position as Mayor Francis Slay's man at
the airport. 

Beracha is also bringing in additional retired
executives to help him. He has tapped Al Litteken,
former vice president at Anheuser-Busch Cos. Inc., to
assist him and expects to ask another one or two
people to join them. 

Beracha is devoting one-third of his time for one year
at no cost to oversee the task force's
recommendations. 

"I can't devote full time to this, but it really
requires full-time staffing, so I'm trying to solicit
the help of up to two more people so there will be
three or four of us working," he said. 

Beracha said he began working with Litteken on the
airport project during the first week of February.
Litteken also will devote one-third of his time to
airport work. 

"Barry and I have worked together successfully in the
past, and I thought we could work together well on
this," Litteken said in a phone call from Texas, where
he had flown on a commercial American Airlines flight.


Since his retirement in 2001, Litteken has been
working on the Incarnate Word Foundation and the
Regional Chamber and Growth Association (RCGA)
Infrastructure Committee. 

"The airport project is certainly a larger scope of
work than I have been doing in any single effort I
have been involved with since retirement, but I want
to help the airport in any way I can to achieve its
full capability," Litteken said. 

Slay formed the task force, comprising business
leaders from the RCGA, Civic Progress and Regional
Business Council, last year after American Airlines
announced cuts of more than half of its flights from
Lambert. 

The task force, in its final report before disbanding,
made a number of recommendations, including timely
completion of the $1.1 billion runway project on
budget; a $10 million reduction in airport costs, with
the savings used for airport upgrades; procuring $50
million in additional funding for the airport, in
order to maintain a cost-per-passenger of between $6
and $8; and an examination of regional governance for
the airport. Lambert, although located in St. Louis
County, is owned by the city of St. Louis. 

The task force also recommended hiring an outside
consultant to assist in negotiating new air-carrier
fees. 

"It will cost $100,000 at a minimum (to hire a
consultant)," said Darryl Jenkins, director of the
Aviation Institute at George Washington University in
Washington, D.C. "Fees for this are quite variable,
but this will take a bit of time." 

The last time the airport negotiated a completely new
carrier agreement was 40 years ago, according to
Lambert spokesman Mike Donatt. Since that agreement,
fee changes have been included as amendments to the
original agreement. Carrier fees include gate and
ticket-counter rental as well as landing fees for
aircraft. 

"For all these years, Lambert Field has been TWA's
turf. But it doesn't surprise me that now they would
want to bring in someone from the outside for this,"
Jenkins said. TWA was historically the largest carrier
at Lambert before it was acquired by American in 2001.


The task force worked with Alexandria, Va.-based
Campbell-Hill Aviation Group Inc. on its final
recommendations. 

"Campbell-Hill is well known in the Washington, D.C.,
area and is qualified to do the negotiating," Jenkins
said. 

Beracha said he would talk to Campbell-Hill as a
possible consultant. "We'll definitely talk to them
before we make a decision." 

A discussion on hiring a consultant will begin later
this year, Beracha said. "I need to find out how that
process works, meet with the airlines and the staff
before we proceed. Part of my specific assignment is
to assist the staff and any potential outside
consultant on the negotiations." 

Bond analyst Stettler said he will be watching the
airport's negotiations with carriers to determine if
it will impact the city of St. Louis' debt rating on
the airport bonds. 

"The use and lease agreements and how the airlines
react to them, as well as what American does in the
next year and a half, have a great impact on the debt
rating," Stettler said. 


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