"Airline bankruptcies will not affect LaGuardia Airport: PA"

Thursday, October 14, 2004

Airline bankruptcies will not affect LaGuardia Airport: PA 
By James DeWeese 
The Flushing (NY) Times Ledger


Two of LaGuardia Airport's largest tenants may be on the financial brink,
but Port Authority officials said the bustling airport would have no problem
filling the terminal space occupied by US Airways and Delta in the event the
troubled carriers were forced to withdraw. 

"We're fortunate in that we have the No. 1 origin and destination region in
the world," said Port Authority spokesman Pasquale DiFulco. "There's always
an airline poised to step in."
 
US Airways is undergoing a major reorganization as it works to emerge from a
second bankruptcy and Delta officials warned earlier this month that
bankruptcy for the troubled carrier is still a possibility. Between them,
the airlines carried 21 percent of the more than 23.5 million passengers to
travel through the airport between July 2003 and July 2004 and hold the
lease on some of the airport's most emblematic spaces.

Arlington, Va.-based US Airways operates out of a stand-alone terminal it
leases and Atlanta-based Delta runs flights out of space in the recently
remodeled Marine Air Terminal and another smaller one adjacent to the US
Airways terminal.

Neither airline has suggested it would leave the airport anytime soon and
both have made some strides in recent weeks toward reining in costs and
restructuring. 

But a federal bankruptcy judge was slated to rule no earlier than Tuesday on
US Airways' controversial plan to slash many workers' pay by 23 percent.
Airline executives told the court US Airways could collapse in fewer than
six months if it does not receive the concessions.

The judge was also slated to rule on whether the company would be required
to make a $110 million pension plan payment, which it failed to make in
September.

Meanwhile, Amy Kudwa, a spokeswoman for US Airways, said LaGuardia
represents a fundamental component of the airline's effort to fully take
advantage of its traditional hub-and-spoke network as well as the
point-to-point travel patterns that have proven so successful for low-cost
carriers. "It's contemplated in our transformation plan that we continue our
presence there," Kudwa said.

But if the worst were to happen, Theodore Kovaleff, an analyst with
Manhattan-based Sky Capital LLC, agreed the Port Authority would have no
problem unloading the space.

"I think they would face quite a bit of competition for the slots," Kovaleff
said. "There are a number of cut-rate airlines that want space in LaGuardia
Airport. There is no shortage of start-ups that want to get space."

A number of low-cost carriers, including Forest Hills-based JetBlue and
Canadian airlines Jetsgo and Canjet, recently have launched service from
LaGuardia.

Kovaleff said Delta's and US Airways' survival - and their continued
presence at LaGuardia - will depend on their ability to emulate the low-cost
carriers' successful labor-contract, fare and flight models. "If they can do
that, then they will be able to remain a viable entity. If they don't, they
won't," said Kovaleff, who added that the fluctuating cost of fuel would
also play a role.

"The Delta situation in some ways is a little less dire simply because of
the fact that US Air has a history (with bankruptcy)," Kovaleff said. "On
the other hand, though, US Air has the very profitable shuttles, so that
aspect could be a saving factor."

Meanwhile, DiFulco said the Port Authority expected demand for air travel
and airport space to grow well into the future. For that reason, he said,
the Port Authority has invested about $1 billion in LaGuardia over the last
decade, DiFulco said. 

In May, the agency approved an additional $15 million outlay for a planning
study to modernize and expand LaGuardia's Central Terminal. And the Port
Authority is accepting requests for proposals to link the airport to Lower
Manhattan with a new ferry service that could be in operation as early as
the end of next year, DiFulco said.

"Airlines come and go," DiFulco said. "If you look back at the airlines that
were major carriers years ago, you have names like Pan Am, TWA, Eastern. All
those airlines are gone now, yet passenger numbers continue to grow."


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