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Old 08-19-2014, 03:30 PM   #1  
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Default UA signs long term DEN lease

Has United said anything to the pilots about this? Vis a Vis, size of the base, specific a/c type plans, possible mainline growth vs. turning it in to an RJ base, international growth, maintenance base...etc? Good news for those based there, I guess this puts to bed for a while the rumor that DEN will be slowly shrunk/go the way of Cleveland.


United Airlines commits to Denver International Airport through 2035 - Denver Business Journal

Denver International Airport and United Airlines have reached an agreement to extend the airline’s lease through 2035, alleviating worries about one of the airport’s biggest operators.

The agreement allows DIA to restructure its debt and United to reduce non-gate facilities that it operates at the airport, according to DIA.

Airport officials briefed Denver city council members Tuesday at the council's Business and Development Committee meeting.

DIA officials said the agreement is expected to save DIA's airlines about $45 million through the airport’s debt restructuring.

United is DIA's No. 1 airline by passenger counts. Denver has been a major hub for Chicago-based United for years, but the scale of United’s operations at DIA has been up in the air since the company’s 2010 merger with Continental Airlines.


United announced in February that it would close the former Continental hub in Cleveland. In July, company officials told analysts during a conference call that the company was evaluating its seven remaining hubs, including Denver.

Losing a major airline's hub operations at an airport means losing jobs, and also reduced competition among airlines operating at the hub airport.

When DIA opened on Feb. 28, 1995, United was the only airline to sign a long-term lease. United signed a 30-year lease to expire in 2025, when the original airport bonds will be paid off.

United averages more than 375 daily departures and by the end of 2014 will serve more than 130 destinations, including Panama City and Tokyo. From Denver, the airline flies to more than 120 airports across the United States, including frequent daily service to top business travel markets in New York, Chicago, Los Angeles and Houston.
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Old 08-19-2014, 05:46 PM   #2  
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Default Lease Deal....

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

Last edited by jsled; 08-19-2014 at 06:12 PM.
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Old 08-20-2014, 04:54 AM   #3  
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Ya, ask CLE how the promises we made are working out.

Glad we got a deal, but I'll believe it when I see it.
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Old 08-20-2014, 05:15 AM   #4  
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Ya, ask CLE how the promises we made are working out.

Glad we got a deal, but I'll believe it when I see it.
What promises were made to CLE?
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Old 08-20-2014, 06:38 AM   #5  
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These deals aren't promises. DIA isn't stupid. The 2012 deal allowed UAL to walk away from a ton of debt, only to get it all back if they don't comply with the conditions. I'll bet this is similar.
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Old 08-20-2014, 11:08 AM   #6  
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These deals aren't promises. DIA isn't stupid. The 2012 deal allowed UAL to walk away from a ton of debt, only to get it all back if they don't comply with the conditions. I'll bet this is similar.
I have to agree with the statement above. I, personally, wouldn't place DEN on the long term horizon for UAL despite this agreement.

JMHO,

Lee
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Old 08-20-2014, 12:25 PM   #7  
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What promises were made to CLE?
"United is obligated by its lease to continue paying on the outstanding debt for the $110 million concourse. The airline will pay $1,112,482 per month until 2027, Airport Director Ricky Smith has said."

Concourse D at Cleveland Hopkins shuttered at midnight

$166,872,300 for a $110m concourse that's been mothballed.

But make sure you don't run that APU too much. They're trying to be profitable.

Last edited by APC225; 08-20-2014 at 12:53 PM.
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Old 08-20-2014, 10:41 PM   #8  
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One would think they learned from cleveland and this agreement is much more ironclad than CLE's was
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Old 08-21-2014, 08:59 AM   #9  
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Originally Posted by APC225 View Post
"United is obligated by its lease to continue paying on the outstanding debt for the $110 million concourse. The airline will pay $1,112,482 per month until 2027, Airport Director Ricky Smith has said."

Concourse D at Cleveland Hopkins shuttered at midnight

$166,872,300 for a $110m concourse that's been mothballed.

But make sure you don't run that APU too much. They're trying to be profitable.
I'm not surprised to see that DEN has the best performance in terms of lowest APU run times in the system. It has always had the best hub ground handling in the L-UAL system. The employees in DEN are consistent, and the results speak for themselves. This announcement for the folks in DEN is well deserved.

Unfortunately for CLE, the economics simply wasn't there (like MEM and CVG for example). I wonder if IAD will meet a similar fate.
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Old 08-21-2014, 05:56 PM   #10  
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Originally Posted by CousinEddie View Post
I'm not surprised to see that DEN has the best performance in terms of lowest APU run times in the system. It has always had the best hub ground handling in the L-UAL system. The employees in DEN are consistent, and the results speak for themselves. This announcement for the folks in DEN is well deserved.

Unfortunately for CLE, the economics simply wasn't there (like MEM and CVG for example). I wonder if IAD will meet a similar fate.
I totally agree. Not that that means squat, but none the less, I see Denver as a minor hub for a long time to come. They may shift resources and put more 737s whilst withdrawing 757s and 320s, but I think the airports we serve, the alternate routing on bad snow days in Chicago, the physical location on the map of the United States, and the generally efficient operation all add up to a hub that will be around for a long time to come, but then I never thought we would go bankrupt so what the heck do I know . . .
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