"D/FW's budget up 50% for next year"

Friday, June 11, 2004

Airport's budget up 50% for next year
By Bryon Okada
The Fort Worth (TX) Star-Telegram


D/FW AIRPORT - The financial days of reckoning for Dallas/Fort Worth Airport
have arrived, as a newly proposed 2005 operating budget tips in at $491.9
million, nearly 50 percent higher than last year's.

Debt payments for five years worth of construction begin, as do the costs of
operating international Terminal D and the SkyLink people mover.

Maintenance deferred during the lean years after the 9-11 terrorist attacks
will resume. Jobs will be added and filled.

"This budget reflects a culmination of many years of hard work," D/FW Chief
Executive Jeff Fegan said at Thursday's preliminary budget briefing with
board members. "We're transitioning from building new infrastructure to
operating the infrastructure."

"The cost increases are significant, but they are planned, and we have been
positioning for this for five years," Fegan said.

Since the Sept. 11, 2001, terrorist attacks, D/FW has stopped discretionary
spending, scaled back maintenance, eliminated pay raises in 2002 and limited
them in 2003. Also in 2003, the airport cut 225 positions, an 11 percent
staff reduction.

"We've basically pulled it down as much as we can," Chief Operating Officer
Kevin Cox said.

Airport cuts and capital transfers have saved tenant airlines $81 million
since 9-11. Economically, D/FW is lean and mean -- and in the best financial
shape it has been in since 9-11, airport officials say.

But the cost of enplaning a passenger at D/FW -- an industry measure used to
compare airports -- will rise to $6.72 in 2005, up from $4.40 now. The major
hub average in 2003 was $8.49, according to airport consultant Leigh Fisher.

In 2009, the key year when all of D/FW's terminal leases expire, the cost
per enplaned passenger is projected to be $8.50, whereas the industry
average will probably be about $12.09, D/FW Chief Financial Officer Chris
Poinsatte said.

SkyLink opens in February. The revamped Energy Plaza/Central Utilities Plant
and the Automated Parking System open in March. A centralized Airport
Operations Center opens in June. Terminal D opens in mid-June or early July,
Fegan said.

Operating costs for these projects are $31.5 million in 2005, increasing to
$69.7 million in 2006, the first full year of operation.

Compared with 2004, debt service will balloon by $88 million in 2005.

D/FW will devote a large part of its federal boarding tax, called a
passenger facility charge, toward paying $70 million of the debt service
increase, leaving $18 million to be covered by airlines.

The net debt service is $215 million in 2005, with airlines covering $145
million of it. Net debt service and operating reserves are 39 percent of the
2004 budget. They will be 48 percent of the 2005 budget.

Expenses related to salaries, benefits, outsourced work, maintenance,
insurance and utilities are all on the rise.

"It's all relative to the size of the program and the size of the service,"
Fegan said.

D/FW executives and board members will continue to review the budget next
Thursday. The plan is for the board to approve a budget on July 1, then send
it on for approval by owner cities Fort Worth and Dallas. The fiscal year
begins Oct. 1.

D/FW Airport growth

D/FW is getting much bigger as projects come on line in 2005:

   . Terminal space will increase 52 percent to 4.7 million square feet.

   . Concession space will increase 67 percent to 322,000 square feet.

   . Parking will increase to 26,000 spaces, up from 17,900.

   . SkyLink will carry 10,000 passengers in an hour; the current airport
train can carry 3,190 passengers.

   . Train station space will be 22 times larger in 2005 than it is now.

   . Energy costs will double.

   . Maintenance facilities will be seven times larger than they are now.

SOURCE: D/FW Airport


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