American Airlines Is Borrowing DFW Airport’s Balance Sheet To Load Up On More Debt

Two new American Airlines projects at Dallas-Fort Worth airport, put on hold during the pandemic, are getting the green light: $100 million apiece for a new flight kitchen and parts warehouse. The current kitchen is too small, and blamed for 2300 flight delays in 2019.

Most striking about the story is this:

Now the airport is planning to finance the projects at a cost of about $2.7 million for American in the first year of the deal.

“They asked us to front the cost due to our lower borrowing cost,” Jeff Benvegnu, DFW’s director of airport real estate, said at a board committee meeting Tuesday.

American’s total debt averaged $33 billion before the pandemic. They ended 2020 with $41 billion in debt. They have since raised 10 billion against the AAdvantage program. There’s not much wood to burn, and even the AAdvantage financing came at a blended average rate of about 5.6%.

So the airline is basically borrowing on the airport’s balance sheet, to leverage the airport’s credit. Of course the airport’s credit is largely based on future cash flow from… American Airlines (and its passengers) along with the federal government. The airport received over $350 million in federal subsidies over the past year and will receive additional funds from the ‘American Rescue Plan’.

DFW’s new terminal F project and renovation of terminal C (which doesn’t include cleaning up the restrooms) remains on hold.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. Terminal C renovation is an active project. Check your Google machine. It’s telling me new that a new construction management firm was just hired to oversee project.

  2. Why a new Flight Kitchen? No plans to add meals in domestic coach as ovens have been removed.Terminal C at DFW does need renovations ASAP!

  3. Glad to see project like this moving forward. AA’s balance sheet maybe leveraged, but the low rates and refi they done, along with future cash flow and saving projects, they will be just fine. You all were calling them bankrupt about this time last year, saying they were being mis-managed, compared to UA and DL, they are looking pretty good.

  4. It’s not irrecoverably ladened with debt yet, but Parker sure seems set on driving AA back into bankruptcy. Does he get bonuses for taking on debt or something? This really comes across as a board-level failure at this point; if they’re not paying attention to the finances, what the heck ARE they paying attention to?

    @Gary – For clarity, this means the debt is NOT on AA’s balance sheet? If so, a relatively smart move by AA mgmt. Probably unfortunate for DFW residents.

  5. I have flown AA for years and have always been treated well by them and most of their Issues are centered on the Corporate Suite…..the entire BOD needs to have their head(s) examined…..Parker and His Clown Show need to be shown The Door. Most of Employees despise Parker and his continual ability to talk out of both sides of his mouth, sport a boyish grin and make stupid remarks every chance he gets. Bring In GOOD Management and AA will Soar.

  6. The head scratcher here is that they postponed term F. They were already going to be 5 years behind when they actually needed that capacity (now). The pandemic gave them a chance to close that gap a little and they punted.

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