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Delta looks to shed CVG buildlings
August 5, 2010
Delta Air Lines has begun preliminary discussions with the Kenton County Airport Board to shift some or all of its facilities at CVG to the airport’s control, officials with the Cincinnati/Northern Kentucky International Airport confirmed Thursday.
The talks include the relatively new Comair headquarters building, as well as Delta’s Terminal 3 and Concourses A and B at its hub at the Cincinnati/Northern Kentucky International Airport. The Atlanta-based airline owns the buildings but leases the land below from the airport.
“I would characterize these as very preliminary but they have happened,” airport spokeswoman Barb Schempf said. Delta is “interested in the disposition of their underused facilities here at CVG.”
Schempf said airport officials were not taking the talks as a sign that Delta was considering pulling out of the hub or cutting it further.
“They have said they were waiting to see the response to the most recent schedule change,” Schempf said. “From our end, these talks are normal business practice to deal with facilities they may not need anymore. And they are standing by the local operation as long as it is profitable.”
The Comair headquarters opened in February 2001 and cost $45 million. The company had considered state and local incentives to build it, but declined them, area economic officials said.
Overall, Delta pays the airport board nearly $20 million in lease fees annually, including the land leases as well as for gate space. Delta would still need to lease back space in terminals and concourses to continue operations, but a transfer of ownership could cut its mortgage payments for the buildings.
The airline has significantly shrunk the local hub in the last five years due in part to the economy and the merger with Northwest Airlines. Flights are down to their lowest levels in 15 years, while the passenger counts are less than half that of five years ago.
Delta officials confirmed the meetings, saying they were part of ongoing dialogue with the airport and any changes in control would not impact travelers or operations.
“Delta continues to lookfor ways to reduce costs and maximize efficiency in all airports including our CVG hub,” Delta spokeswoman Kristin Baur wrote in an e-mail. “Any efforts to achieve these goals would be transparent to customers and would not impact our flight operations at CVG. The meetings are ongoing business discussions regarding CVG to ensure facility costs are as competitive as possible and that the airport has the resources it needs to be competitive.”
This news comes as a top executive with regional carrier SkyWest said the Utah-based carrier could be interested in buying Erlanger-based Comair – and after Delta has already sold off all its regional carriers with the exception of Comair.
SkyWest’s Atlantic Southeast Airlines unit is closing its own deal for another carrier, ExpressJet Regional Holdings. SkyWest previously bought Atlantic Southeast from Delta.
Brad Rich, the regional airline’s chief financial officer, told Bloomberg News Thursday that “we are certainly capable of this kind of transaction.”
“We think it’s a transaction that could bring value to one of our major partners, in this case Delta,” Rich said, although company officials later said they could not confirm interest in any particular carrier.
Delta executives have previously said they don’t need to own regionals to derive benefit and that they continue to explore their options. Comair was part of the original proposal to sell Mesaba and Pinnacle earlier this year as well but was left out of the final deal.
Comair operates 97 aircraft with 2,500 employees. The aircraft are a mixture of owned and leased, and all are Canadair Regional Jets built by Bombardier Inc.
Check Company employee websites @ 4:00 a.m.
Delta looks to shed CVG buildlings
August 5, 2010
Delta Air Lines has begun preliminary discussions with the Kenton County Airport Board to shift some or all of its facilities at CVG to the airport’s control, officials with the Cincinnati/Northern Kentucky International Airport confirmed Thursday.
The talks include the relatively new Comair headquarters building, as well as Delta’s Terminal 3 and Concourses A and B at its hub at the Cincinnati/Northern Kentucky International Airport. The Atlanta-based airline owns the buildings but leases the land below from the airport.
“I would characterize these as very preliminary but they have happened,” airport spokeswoman Barb Schempf said. Delta is “interested in the disposition of their underused facilities here at CVG.”
Schempf said airport officials were not taking the talks as a sign that Delta was considering pulling out of the hub or cutting it further.
“They have said they were waiting to see the response to the most recent schedule change,” Schempf said. “From our end, these talks are normal business practice to deal with facilities they may not need anymore. And they are standing by the local operation as long as it is profitable.”
The Comair headquarters opened in February 2001 and cost $45 million. The company had considered state and local incentives to build it, but declined them, area economic officials said.
Overall, Delta pays the airport board nearly $20 million in lease fees annually, including the land leases as well as for gate space. Delta would still need to lease back space in terminals and concourses to continue operations, but a transfer of ownership could cut its mortgage payments for the buildings.
The airline has significantly shrunk the local hub in the last five years due in part to the economy and the merger with Northwest Airlines. Flights are down to their lowest levels in 15 years, while the passenger counts are less than half that of five years ago.
Delta officials confirmed the meetings, saying they were part of ongoing dialogue with the airport and any changes in control would not impact travelers or operations.
“Delta continues to lookfor ways to reduce costs and maximize efficiency in all airports including our CVG hub,” Delta spokeswoman Kristin Baur wrote in an e-mail. “Any efforts to achieve these goals would be transparent to customers and would not impact our flight operations at CVG. The meetings are ongoing business discussions regarding CVG to ensure facility costs are as competitive as possible and that the airport has the resources it needs to be competitive.”
This news comes as a top executive with regional carrier SkyWest said the Utah-based carrier could be interested in buying Erlanger-based Comair – and after Delta has already sold off all its regional carriers with the exception of Comair.
SkyWest’s Atlantic Southeast Airlines unit is closing its own deal for another carrier, ExpressJet Regional Holdings. SkyWest previously bought Atlantic Southeast from Delta.
Brad Rich, the regional airline’s chief financial officer, told Bloomberg News Thursday that “we are certainly capable of this kind of transaction.”
“We think it’s a transaction that could bring value to one of our major partners, in this case Delta,” Rich said, although company officials later said they could not confirm interest in any particular carrier.
Delta executives have previously said they don’t need to own regionals to derive benefit and that they continue to explore their options. Comair was part of the original proposal to sell Mesaba and Pinnacle earlier this year as well but was left out of the final deal.
Comair operates 97 aircraft with 2,500 employees. The aircraft are a mixture of owned and leased, and all are Canadair Regional Jets built by Bombardier Inc.