• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Lambert Field's Operating Income Plunges 71 Percent in 2005

Posted on: Saturday, 7 January 2006, 00:00 CST

By Tim McLaughlin, St. Louis Post-Dispatch

Jan. 7--Lambert Field's operating income plunged 71 percent in fiscal 2005 when the airport lost a key source of lease revenue from Boeing Co. and its coffers felt the full effect of American Airlines' cutbacks in late 2003.

Lambert reported operating income of $4.4 million for the fiscal year that ended June 30, compared to $14.9 million in fiscal 2004.

Lambert's operating revenue in fiscal 2005 also fell 7.5 percent to $110.3 million. The airport lost $6.4 million in revenue after a Boeing property lease expired.

The airport's financial statements also showed that revenue and profit declines resulted from American's reduced flight schedule. In November 2003, American -- Lambert's biggest source of revenue -- cut daily flights in St. Louis to 207 from 421.

The move sent shock waves through the St. Louis community, but Lambert is slowly building up flights and remains on steady financial footing. Lambert's operations are generating enough cash to fund capital improvement projects in the next several years.

Lambert officials said Friday they expected the declines in revenue and profit and planned for their impact by cutting costs after American cut flights in late 2003.

"We're pleased that the airport was able to meet all of its financial obligations and make a positive contribution to retained earnings," airport officials said.

Airlines at Lambert boarded 7.05 million passengers in fiscal 2005, down 12.1 percent from the year-earlier period. In the current fiscal year, passenger volume is trending upward. The airport said airlines could board 7.7 million passengers, a 10 percent gain from fiscal 2005.

When passenger traffic declines, it has an immediate impact on Lambert's finances because the airport collects a federal levy of $4.50 for nearly every passenger who boards a plane.

This so-called passenger facility charge generated $27.2 million for Lambert in fiscal 2005, but that was about 14 percent less than in 2004 because of reduced traffic. Revenue from the levy can be spent on airport improvements approved by the Federal Aviation Administration.

Meanwhile, landing fees and airport concessions, such as food and bookstore sales, also suffered in fiscal 2005 from reduced passenger volume. Parking revenue rose, but as a recent Post-Dispatch analysis showed, Lambert's collections rank near the bottom among major airports. Airport-controlled parking lots do well, but off-site rivals siphon millions of dollars in revenue each year, hurting Lambert's coffers.

In November, Lambert Field officials approved a 51/2-year lease agreement with American and Southwest airlines. The deal with the airport's two major airlines keeps revenue at current levels and offers carriers up to $40 million in incentives to add to their flight schedules.

The new lease also gives Lambert pre-approval from the airlines to spend $153 million on capital projects between 2006 and 2010.

American's cutbacks forced the airport to cut operating expenses in fiscal 2004 by $10.4 million, or 9.1 percent, compared to the previous year. But in fiscal 2005, operating expenses inched upward, rising $1.5 million, or 1.4 percent, to $105.9 million. The financial statements said an uptick in the airport's depreciation and amortization expenses was the primary reason.

The airport's biggest cost is the interest it pays on outstanding debt. A new runway, due to open this year, will cost the airport about $1.1 billion. The airport's interest expense in fiscal 2005 was $36.2 million, down from $40.8 million in the previous year.

The airport's cash and investments totaled $383.7 million at the end of the fiscal year. The money is invested conservatively, ranging from U.S. treasuries to certificates of deposit. The airport's total liabilities stood at $968.3 million and total assets were $2.1 billion, the financial statements said.

-----

To see more of the St. Louis Post-Dispatch, or to subscribe to the newspaper, go to http://www.stltoday.com.

Copyright (c) 2006, St. Louis Post-Dispatch

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

BA, 7661, AMR,

Source: St. Louis Post-Dispatch

More News in this Category