"Airline says it won't pay MIA cost overruns"

Saturday, July 10, 2004

MIAMI INTERNATIONAL AIRPORT
Airline says it won't pay cost overruns
American Airlines said it will not pay for $66 million in cost overruns
for its terminal project at Miami International Airport.
BY CHARLES RABIN
The Miami (FL) Herald


American Airlines Senior Vice President Peter Dolara said Wednesday that
the carrier would not cover $66 million in cost overruns for
construction of the North Terminal it is building at Miami International
Airport.

''We will not negotiate. We will not spend the money,'' said Dolara, who
considers the venture a partnership with the county.

On Monday, Dolara is scheduled to meet with County Manager George
Burgess and Miami-Dade Aviation Director Angela Gittens to discuss
construction woes and delays that have plagued the massive $1.6 billion
project, which would create a new hub for American, MIA's largest
carrier.

Completion of the project has been pushed back from May 2006 to November
2007.

Burgess refused to comment on Dolara's stance until after Monday's
meeting, saying his goal was to sit the two down together and solve the
problems that are causing construction problems at the airport.

''I'd really like to understand each issue associated with the North
Terminal,'' he said.

Three weeks ago, Gittens wrote a memo to Burgess saying the North
Terminal project was $87 million over budget and 18 months behind
schedule. She called American's construction management team ''lax'' and
added that her department should take over and finish the project and
the airline had refused to pay for the cost overruns.

American executives blame the delays on unforeseen costs after the 2001
terrorist attacks, mandatory environmental cleanups, and the difficulty
in building a massive terminal, transit system and baggage mover at a
site that continues to serve passengers.

The airline is concerned that costs could increase even more by delays
caused if the Aviation Department takes over the project.

''For us, we are in a race,'' Dolara said. ``Others want this market.
The longer the project takes, the more money it costs and the more
market share we lose.''

He called the project vital to the airline's continued growth and
commitment in Miami.

''We are here to stay,'' Dolara said.

After Gittens' memo, Burgess notified the aviation director that she
could not speak with the press without permission from his office. She
hasn't granted an interview since.

Then Burgess put Gittens on ''management watch,'' saying among other
things that she showed a lack of respect ''to me and those we serve'' by
signing a petition to create an independent airport authority to oversee
contracts at MIA.

Gittens' memo to Burgess irked Dolara, who responded by calling the
aviation director ''uncooperative'' and unwilling to follow through with
the County Commission's vision to build a world-class terminal.

Dolara said Wednesday that he hopes to work out the differences with
Gittens. ''We have a need for collaboration,'' he said.

Gittens and Dolara have been at odds since 2002, when she tried to kill
the airline's request for an additional $321 million to cover cost
overruns for the same terminal project. American eventually got $211
million from the county and promised not to ask for more money -- a move
the carrier now says was too rosy.

Ten years in the making, American's original plan was to build a $500
million terminal. The price has skyrocketed since, with the county
picking up the tab each time.

Although no date has been set, American is expected to ask commissioners
to foot the $66 million bill, which would come from part of a $4.8
billion capital improvement project bond to which the airline
contributes through gate receipts.

Burgess said he hoped Dolara and Gittens could find common ground before
it reached him or the commission.

''In my perfect world, those issues would be resolved so they don't find
the way to my desk,'' Burgess said.


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