New Proposal Would Increase Long-term Financial Stability and Air Service Competitiveness of Minneapolis-St. Paul International Airport.MINNEAPOLIS Minneapolis (mĭn'ēăp`əlĭs), city (1990 pop. 368,383), seat of Hennepin co., E Minn., at the head of navigation on the Mississippi River, at St. Anthony Falls; inc. 1856. & ST. PAUL St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , Minn. -- Metropolitan Airports Commission (MAC) Executive Director Jeff Hamiel today unveiled a plan to protect the traveling public's interests in Northwest Airlines bankruptcy proceedings bankruptcy proceedings n. the bankruptcy procedure is: a) filing a petition (voluntary or involuntary) to declare a debtor person or business bankrupt, or, under Chapter 11 or 13, to allow reorganization or refinancing under a plan to meet the debts of the party and encourage air service growth at Minneapolis-St. Paul International Airport (MSP (1) (Management Service Provider or Managed Service Provider) An organization that manages a customer's computer systems and networks which are either located on the customer's premises or at a third-party datacenter. ). "Airlines are facing a new economic reality, and we must also face this new reality if we are to protect the region's financial interests and compete successfully for air service," Hamiel said. "I am asking the MAC board to consider a strategy I believe will help ensure the people of Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces continue to enjoy easy access by air to domestic and international destinations. At the same time, we are taking steps to protect MSP's long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. financial stability in an economically volatile industry." The plan centers on reducing airline rates and charges through new capital cost recovery methods and sharing of certain concession revenues, while still earning cash the MAC can use to pay for major maintenance and minor capital projects. In addition to giving MSP a competitive edge for air service, the plan minimizes potential financial and operational risks associated with Northwest's bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most . Those risks include the possible rejection of airport leases and default on Northwest's obligations to pay $290 million in general obligation debt to the MAC. "The plan I am proposing offers benefits to all parties: the MAC, Northwest Airlines and other airlines operating at MSP," Hamiel said. The plan is based on six principal goals: * Maximize MSP's competitive strength compared to other airports * Secure a commitment from Northwest to uphold up·hold tr.v. up·held , up·hold·ing, up·holds 1. To hold aloft; raise: upheld the banner proudly. 2. To prevent from falling or sinking; support. 3. key MSP lease agreements and bond obligations in the bankruptcy proceedings * Minimize the MAC's potential financial and operational exposure resulting from Northwest's bankruptcy filing * Maintain Northwest's hub at MSP and encourage growth in air service * Preserve Minnesota jobs related to Northwest's headquarters and hub and related economic benefits * Provide a long-term strategy for financial stability Noting that two dozen airlines have declared bankruptcy since 2000, Hamiel said, "Airlines have reduced operations, airline employees have been furloughed or made huge sacrifices in pay and benefits, and aircraft suppliers and other vendors have renegotiated financial arrangements. Airports must do their part as well or risk losing the air service needed to fuel their regions' economies." Numerous airports have recently reduced airline costs, including Denver Denver, city (1990 pop. 467,610), alt. 5,280 ft (1,609 m), state capital, coextensive with Denver co., N central Colo., on a plateau at the foot of the Front Range of the Rocky Mts., along the South Platte River where Cherry Creek meets it; inc. 1861. , Salt Lake City, Philadelphia and Pittsburgh. Northwest Airlines' other U.S. hubs also have reduced airline rates: Detroit Metropolitan Airport recently announced a 28 percent reduction in landing fees, and Memphis reduced its landing fee by 5 percent and its terminal rental rate by about 10 percent. The dollar value of savings to each airline operating at MSP varies depending on the airline's service commitment to the community. The more service an airline offers, the greater their potential savings from the plan. In all, the plan would save scheduled airlines an estimated $279 million between 2006 and 2020, including projected savings of $239 million to MSP's largest tenant, Minnesota-based Northwest Airlines. Together with separate budgetary actions the MAC board took today to reduce 2007 rates and charges, the plan would reduce airlines' cost per enplaned passenger at MSP by 27 percent. As a result, airlines' cost per enplaned passenger at MSP in 2007 would be 44 percent below the average for large hub airports Africa Algeria
In addition, the plan would enable airlines to extend their terminal building leases at MSP through 2020 with the exception of Concourse G. The term length for Northwest's lease on that concourse would be negotiated when the MAC is ready to move forward with the 2020 expansion program. That program was put on hold in August 2005 as Northwest prepared to file for bankruptcy and scale back operations. Financial Advantages of the Proposal The plan is designed to strengthen the MAC's financial position in a number of ways: * Northwest Airlines would continue to make payments on more than $290 million in outstanding general obligation bond debt to MAC, agree to assume its terminal and aircraft gate lease in bankruptcy, and retain its hub operation at MSP and headquarters in Minnesota. In addition, the airline would retain its lease on maintenance building C at a reduced rate, lease whatever portion of maintenance building B it continues to use, and honor As a verb, to accept a bill of exchange, or to pay a note, check, or accepted bill, at maturity. To pay or to accept and pay, or, where a credit so engages, to purchase or discount a draft complying with the terms of the draft. other current MSP facility leases. * Northwest would make available its revenue stream from MSP airport concessions rebates as collateral against $262 million in existing general obligation debt to the MAC. * Safeguards in the program, including limited conditions under which concession revenue rebates would be provided to airlines, ensure the MAC can continue to meet its debt service requirements without using its taxing authority. The majority of airport-generated funds would still be available for MAC use and the organization's essential financial reserves preserved. Competitive Advantages of the Proposal Other aspects of the program make MSP more cost-competitive with other airports and provide financial incentives for airlines to begin or expand service at MSP: * Airlines rates and charges at MSP would decrease back down into the lower half of all large hub airports due to adoption of rate methodologies used by nearly all other large airports. * Airlines would be charged the actual cost of debt service instead of depreciation and imputed interest Imputed Interest A term used to describe interest considered to be paid, even through no interest payment has been made. Notes: Imputed interest is calculated based upon actual payments that are to be paid, but have not yet been paid. , but with additional guaranteed monies to the MAC for major maintenance and minor capital projects. This will provide near-term savings to the airlines and increased long-term protection for the MAC. * Airlines would be rewarded for promoting airport concessions sales by bringing potential customers to MSP's shops, restaurants and auto rental facilities through a concession revenue rebate rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. program for select airport concessions. This incentive for new or existing airlines to drive more passengers - and concession sales -- through MSP is tailored through a rebate program with a sliding scale slid·ing scale n. A scale in which indicated prices, taxes, or wages vary in accordance with another factor, as wages with the cost-of-living index or medical charges with a patient's income. ranging from 0 to 25 percent, plus 50 percent of revenues beyond projected forecasts. The size of the rebate would rise as gross concession revenues increase, providing an incentive for airlines to direct more travelers through MSP. * Airlines seeking to enter the Twin Cities market and existing carriers looking for Looking for In the context of general equities, this describing a buy interest in which a dealer is asked to offer stock, often involving a capital commitment. Antithesis of in touch with. space to grow would have an attractive opportunity to use six contiguous Adjacent or touching. Contrast with fragmentation. See contiguous file. gates on the Lindbergh Concourse D now occupied by Northwest. Those gates, together with the new Humphrey Terminal, provide attractive opportunities for airlines to begin or grow service at MSP. * Northwest would cede control of ground support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services for competitors using international gates on Concourse G, providing enhanced operational flexibility. Any adjustments in methodology and payments under the proposal are conditioned on Northwest Airlines emerging from bankruptcy having assumed its bond obligations, terminal lease and other lease agreements. The proposal will be discussed by the MAC board in January. Where the Airline Savings Would Occur [TABLE OMITTED] (a) includes $15.5 million rate reduction included in 2007 operating budget Noun 1. operating budget - a budget for current expenses as distinct from financial transactions or permanent improvements budget items, operating cost, operating expense, overhead - the expense of maintaining property (e.g. |
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