http://www.post-gazette.com/pg/03120/18059...BR>Indianapolis may woo US Airways
Wednesday, April 30, 2003
By Frank Reeves, Post-Gazette Staff Writer
Could US Airways be headed for a soft landing in Indianapolis?
The airline''s decision to reject its leases at Pittsburgh International Airport, moments before it emerged out of bankruptcy, has fueled speculation that the region''s dominant carrier might be thinking of moving its aircraft maintenance facilities to Indianapolis International Airport. Such a move could mean the loss of 4,000 jobs, nearly half of the airline''s almost 9,000 local employees.
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The 1.1-million-square-foot maintenance facility, which United Airlines built in Indianapolis in the 1990s, is widely regarded as the most modern such facility in the United States and is sitting empty. United, which filed for bankruptcy last year, closed the facility in early April, leaving behind a skeleton crew of about 100 at the complex, which prior to 9/11 employed some 3,000 mechanics and support staff.
US Airways spokesman David Castelveter has repeatedly denied that the airline had any intention of moving its maintenance operations to Indianapolis. These are rumors from Internet chat pages and are totally unsubstantiated, he said.
Castelveter said it wouldn''t make sense for US Airways to have its planes overhauled at an airport where it has relatively few scheduled flights. The planes would have to detour from their normal routes and fly to a location on the fringes of US Airways'' network, increasing the time and cost of maintaining the fleet.
But not everyone is convinced that such a move is so far-fetched. William Lauer, chairman of Tarentum-based Allegheny Capital Management and a veteran airline industry observer, said he thought there was a 65 percent to 75 percent chance that US Airways might move its maintenance operations to Indianapolis.
The Indianapolis facility would immediately meet all their needs, said Lauer, whose firm once invested in US Airways. I could see their making an extremely attractive offer that [US Airways] couldn''t refuse.
The Indianapolis facility was originally built to repair United''s fleet of Boeing 727 narrow-body jets, and later was expanded to include bays that could accommodate Airbus and other wide-bodied aircraft.
Even before United closed the facility this month, Indianapolis Mayor Burt Peterson appointed a task force in January to develop a strategy for using the facility should United decide to scale back its operations or shut it down.
To aid the task force, which included airline industry, labor and government representatives, the group hired a Denver-based consulting firm, Strand Associates, to help it develop plans to keep the facility open and to explore potential uses for the building.
The city already has begun an aggressive effort to get airlines to move their heavy maintenance work to Indianapolis, said Jo Lynn Garing, a spokeswoman for Mayor Peterson. But Garing declined to say which airlines have been contacted or what their response has been.
The task force has been reviewing several options: the ideal, which appears less likely given the depressed state of the airline industry, is that one carrier would lease the entire maintenance facility, said Bob Voorheis, president of the Central Indiana Labor Council and a member of the task force. It is more likely that several airlines would use the facility, each with its own space.
Lacy Johnson, the head of the Indianapolis Airport Authority who co-chairs the task force, said no final decision could be made about the facility''s future until United decides whether to abrogate or honor its lease.
United could seek U.S. Bankruptcy Court approval to reject its $690,000 annual lease for the facility. But as of yesterday, the nation''s second-largest airline hadn''t done so, according to a company spokesman.
Bruce Strand, president and chief executive officer of Strand Associates, noted that US Airways was seeking ways to cut its maintenance costs and that Pittsburgh maintenance facilities -- spread out over several buildings and using varying levels of technology -- weren''t all that efficient. By contrast, he said the Indianapolis facility was absolutely state of the art, where everything flows together.
Strand also said it played well into what''s happening at many major carriers -- the outsourcing of maintenance work now done in-house. He said one way that carriers such as JetBlue and Southwest had been able to hold down maintenance costs, which typically are 10 percent to 15 percent of a carrier''s expense, was by using mechanics outside the company. Many airlines, including US Airways, already outsource much of their light maintenance work.
US Airways has long pressed for improvements of the maintenance facilities at Pittsburgh International Airport. Nearly two years before terminating its agreement to acquire US Airways, United Airlines pledged $100 million to help pay for a $160 million renovation and expansion of the maintenance facilities at the airport. State and local governments were expected to pick up the rest.
The issue surfaced again last month. After US Airways terminated its leases at Pittsburgh International, it requested the state to pay for $155 million in capital improvements, including $40 million for a regional-jet maintenance facility and training center. The airline also wanted to reduce the $62 million in its annual operating and debt costs at the airport.
In addition, US Airways wants $140 million in debt relief at the Philadelphia International Airport as well as $95 million in capital improvements. However, the airline has not abrogated its leases in Philadelphia.
These topics are expected to come up today when Gov. Ed Rendell meets with local officials, airport executives and legislative leaders to craft a state response to US Airways'' request for state aid.
I expect to listen and hopefully get some good ideas, Rendell said yesterday.
Rendell is expected to meet with US Airways officials early next month, when he is likely to press the airline on what it is willing to do in return for help from the state and local governments.
Allegheny County officials are expected to ask Rendell to consider ways to utilize federal and state revenues, along with airport passenger facility charges, to offset the costs of improvements and rent reductions that US Airways is seeking in Pittsburgh and Philadelphia.
Passengers departing from Pittsburgh International Airport each pay a $3 dollar facility charge, which prior to 9/11, airport officials had hoped would generate up to $25 million annually.
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(Frank Reeves can be reached at freeves@post-gazette.com or 412-263-1565. Post-Gazette staff writers Mark Belko and Johnna A. Pro contributed to this article.)
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