"Northwest bankruptcy should have little effect on Detroit hub"

Wednesday, September 14, 2005

Metro Airport would be OK 
Money flows in as long as airline flies 
BY JOHN GALLAGHER and JEWEL GOPWANI
The Detroit (MI) Free Press


The top finance official at Detroit Metro Airport said Tuesday that a
bankruptcy filing by Northwest Airlines -- the airport's largest tenant --
would have almost no immediate effect on airport operations.

Tom Naughton, chief financial officer of the Wayne County Airport Authority,
said Metro has about six months operating cash in the bank to dip into if
needed to keep the lights on.

Moreover, since Northwest is expected to continue flying if and when it
files for Chapter 11 reorganization, the airport expects to continue to
collect various fees generated by Northwest. The same applies to Delta Air
Lines, which is also said to be preparing for bankruptcy.

"We're not in any immediate danger of having to disrupt service," Naughton
said Tuesday.

Airports generate operating revenue through usage charges, and Northwest,
which operates a major hub out of the McNamara Terminal, is the main
contributor to Metro's $225-million annual budget. In all, Northwest will
contribute about $70 million in landing fees and rents to the airport this
year.

Northwest contributes 68% of all the landing fees that Metro collects, 62%
of all rents and 78% of passenger facility use fees. If those payments were
interrupted, the airport would quickly face financial hardship. But
Northwest is current in all its monthly payments to the airport authority,
which operates Metro. And airport officials don't expect that a bankruptcy
filing would interrupt those payments because Northwest intends to keep
flying -- and to keep generating those usage fees.

Only if Northwest curtailed its schedule to a significant degree would the
airport face a financial crisis.

That's also true of Northwest's share of debt payments for construction of
the $1.2-billion McNamara Terminal, which opened in February 2002.
Construction was financed through a series of airport revenue bonds sold to
investors. The bonds are paid off from revenues from landing fees and
passenger facility use fees and some federal transportation grants.

Airport authorities say they believe there'll be no interruption of payments
should Northwest have to work its way through a reorganization.

Through July 31, Northwest had carried 64.3% of all passengers that passed
through Metro this year, and its Northwest Airlink feeder carriers, Mesaba
and Pinnacle, carried another 14.3% between them. The next biggest carrier
was Spirit Airlines with 4.5% of all passengers, while American Airlines
carried 2.6% and Southwest Airlines 2.4%.

Although it expects to suffer no hardships in a Northwest filing, the
airport authority has been preparing. This summer, the airport extended a
contract with Milwaukee-based law firm Foley & Lardner LLP to represent the
airport in a potential Northwest filing.

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