Denver’s airport has allowed airlines ailing from the coronavirus pandemic to put off three months of rent and landing fees worth about $60 million, officials said Thursday as they outlined ways DIA is tightening its own belt.
About a month after the health and economic crisis began gripping the nation, air travel has all but shut down. Denver International Airport faces a harsh new reality: After charting years of record-breaking passenger growth — reaching nearly 70 million in 2019 — traffic at security checkpoints has dropped by 94%, a remarkable reversal of fortune.
CEO Kim Day said it’s possible DIA will see less passenger traffic this year than in 1995, the year the airport opened. That would mean fewer than the 31 million passengers recorded that year by DIA and Stapleton International Airport, its predecessor.
In an interview with The Denver Post, Day said the airport’s outlook and financial picture depends wholly on how long the pandemic lasts — and how slowly air travel recovers as the economy restarts.
“We’re going to have a tough year, and our goal is to keep our airport healthy,” said Day, an expansion-minded chief executive who has overseen the airport since 2008.
As reasons for optimism, she cited DIA’s extensive operating reserves and efforts underway to cut costs within its $500 million-plus operating budget for this year.
Steps so far include a hiring freeze, reductions in other expenses and a reduced reliance on outside contractors, including for snow plowing. DIA’s $3.5 billion capital program is being reviewed for projects that could be scaled back or delayed.
Projects already underway include the troubled terminal renovation project, which recently restarted after the costly exit of the previous contracting team, and concourse expansions that are adding dozens of gates that United, Southwest and other airlines requested before the pandemic struck.
In the meantime, airport officials recently cut some slack to the airlines, which are seeking federal aid as their revenue plummets. At the largest carriers’ request, Day confirmed, DIA officials granted all the flexibility to delay payment of their March, April and May facility rental fees and landing fees through the end of the year.
“I have talked to some other airports who have not been able to do that,” she said.
The airline rental fees are DIA’s largest single source of income, forecast to make up nearly 24% of its $892 million in operating revenue this year. The airport is owned by the city of Denver but operates as a self-sufficient enterprise, and it banks part of its operating revenue for a variety of on-site purposes.
In short, the airport is flush with cash compared with most government entities — at least for now.
Gisela Shanahan, DIA’s chief financial officer, said the airport long has aimed to hold on to enough of a reserve to keep the airport operating for 500 days when it must “absorb shocks to the system — like the one we are currently experiencing with COVID-19,” the respiratory disease caused by the coronavirus.
Shanahan said 500 days of operating expenses amounts to $700 million. While she’s still in the process of finalizing the airport’s 2019 financials, she said she expects the reserves to land well above that level.
DIA also anticipates receiving a still-undetermined share of $10 billion in aid set aside for airport operators in the $2 trillion stimulus bill approved recently by Congress.
“I would not say we are worried,” Day said about the pandemic’s financial impact. “We have a very collaborative leadership team, and everybody is working hard to keep us in a good place. It’s going to be a hard year, don’t get me wrong. We’re going to make a lot of hard decisions.”
Tough choices also have faced concessionaires and others who depend on airport travelers.
As for DIA’s expansion projects, the airport in 2018 borrowed $2.5 billion for its capital program, more than it needed at the time, to take advantage of favorable interest rates.
“We have a bucket of money and we can decide what we spend it on,” Day said, as the airport reviews its projects. “So we can make a decision about which projects to do now and which to do later.”
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