This here is a SCORE! Saves us 35M/yr...saves good ol' SWA 4-5M/yr
. The last time UAL cut a deal with DIA (baggage debt), SWA threatened a lawsuit. Can't wait for their latest reaction. Plus UAL commited to keep 9.1% of system capacity at DEN for 10 years!
Lease deal keeps United at DIA through 2035, but will up airport interest costs - The Denver Post
Denver International Airport proposed a new lease agreement with United Airlines Tuesday morning that will save the carrier $35 million a year in exchange for the assurance that its hub operations will stay in Denver through 2035.
The double-barreled deal is a give and take of negotiated concessions between the airline and DIA that hinges on the airport's ability to restructure its debt by deferring its variable rate bonds by six years to 2031. Extending the period of the bonds is expected to cost the airport $20 million in interest, according to airport chief financial officer Patrick Heck.
DIA has agreed to take back 140,000-square-feet of leased, but unused, space on Concourse B from United. The non-gate space is a patchwork of ramp, mezzanine, support and basement space scattered throughout the property.
DIA also will do away with its annual connecting passenger penalty, which charges United $6 for every connecting passenger below its 6.5 million target. United has failed to reach this threshold by about 1.5 million passengers for the last two to three years. Airport officials estimate that dropping the penalty saves United about $9 million a year.
The airport has agreed to forgive United's bill for its baggage sorting system. The airline was to begin making payments in 2015.
In exchange for these concessions, United has agreed to keep 9.1 percent of its total system capacity at DIA through 2025. In a rapidly changing airline industry, this gives airport officials some peace of mind that they won't lose their largest, global carrier in the next decade.
Airport officials stress that the restructured variable rate debt and amortization procedure will save all of its carriers money.
United, DIA's largest carrier with 40 percent of the market share, will save $35 million a year. While Southwest Airlines, its second largest carrier with 26 percent of the market share, will save an estimated $4 million to $5 million, and its third-largest carrier with 19 percent of the market, Frontier Airlines, will save about $2.5 million annually.
But none of these lease agreement amendments go into effect until Jan. 1 and are contingent upon DIA's ability to restructure its debt this fall, which has to be approved separately by Denver City Council.
The airport estimates that by prolonging paying back its bonds by six years, it will accrue up roughly $20 million in additional interest charges, but that is dependent on market rates.
The deal was approved by the Denver City Council's Business Development Committee and forwarded to the full council and Mayor Michael Hancock.
United, Denver's largest carrier, was the only airline to sign a long-term lease when DIA opened in February 1995. That agreement was to expire in 2025, when the original airport bonds were set to be paid off.
From 2012:
http://www.denverpost.com/ci_2059318...denver-airport