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MAC cuts airport spending; NWA stops payments
By Mark Zdechlik
Minnesota Public Radio
September 26, 2001
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Officials with the Metropolitan Airports Commission say they've instituted massive cost cutting because of a more than $20 million budget shortfall. The MAC says revenue from operations at the Minneapolis-St. Paul airport is falling because of scaled-back flight schedules there and airport officials say compounding problems is Northwest's decision not to pay for its operations.
"This industry, quite frankly, is in crisis. And it's having rippling effects throughout the country," according to MAC Executive Director Jeff Hamiel.
(MPR Photo/Mark Zdechlik)

Metropolitan Airports Executive Director Jeff Hamiel says what had already been shaping up to be a difficult year for the Minneapolis-St. Paul airport turned dismal when terrorists struck on September 11th, shutting down airports across the nation and scaring millions of travellers from flights.

"Right now what we're doing is basically battening down the hatches, and not incurring any additional debt and reducing our expenses as much as possible," Hamiel said.

Hamiel outlined a series of actions before a special meeting of the airports commission's executive committee. The MAC has instituted a hiring freeze in all areas except safety and security, all major equipment purchases are on hold, and no new projects will go forward.

"Times are critical in this industry right now," he said. "This industry, quite frankly, is in crisis. And it's having rippling effects throughout the country. My message to staff is that any expenditure not absolutely essential to the operation of the airport should be eliminated or deferred until further notice."

The commission is cutting $118 million in planned improvements for the balance of this year and Hamiel says the MAC will spend just $76 million of the more than $370 million it had planned to spend on construction next year.

Among the casualties are the rebuilding of an existing runway, and a nearly one-year delay for completion of the new, much touted north-south runway. The MAC will also postpone construction of new fire-and-rescue and freight facilities, and overflow parking at the Humphrey Terminal. It will also reduce spending on noise mitigation programs by $31 million next year.

Improvements at the MAC's six reliever airports will also be indefinitely deferred, excluding some security and utility projects.

Nearly $90 million of spending on the airport's portion of the the light-rail transit line however will remain in the budget.

MAC Executive Committee member Dick Long says it's prudent to cut spending on airport projects, but he says Northwest should make its payments to the airports commission.
(MPR Photo/Mark Zdechlik)

MAC's plans for cost-cutting are, so far, meeting with approval of its appointed commissioners.

Executive Committee member Dick Long says with so much in flux now, dramatic spending cuts are appropriate. "It's not prudent to spend money you don't have," he said.

Angering some, as the MAC slashes spending, is the fact that Northwest Airlines owes the MAC about $5.5 million in back landing fees and lease payments.

MAC Executive Director Jeff Hamiel says Northwest informed his office Friday that it would not be making payments to the airport. Hamiel says if Northwest continues to withhold payments, that would puts in jeopardy $43 million of the roughly $53 million in payments the MAC should receive from airlines between the beginning of September and the end of the year.

Northwest spokeswoman Mary Beth Schubert wouldn't say when the company will turn over the funds. "Northwest has delayed payments while we continue to assess our overall financial positions and we have been in regular communications with all parties and they have shown great patience as we go through this precarious phase and continue to evaluate," she said.

Commissioner Long says given that Northwest will be the recipient of nearly $500 million of the $5 billion in cash that Congress appropriated in its airline bailout, the least Northwest could do would be to meet it obligations to taxpayers.

"Absolutely I think they should pay us. We have bills to pay too," he said.

MAC staff say they expect to enter into talks with Northwest regarding airport payments this week. Executive Director Hamiel says the MAC is willing to do what it can to help all of its tenants weather the airline industry's current difficulties, but that it, too, must meet its financial obligations. As the MAC cuts costs, officials say they expect when new security measures now under discussion in Washington are implemented there will be additional costs for the airport, further straining the MAC's already stretched budget.