DFW takes cautious approach to expansion as air traffic picks up
Dallas Fort Worth International Airport plans to expand two existing terminals rather than build a brand new one as traffic continues to grow since the COVID-19 pandemic, CFO Chris Poinsatte said.
“Before COVID, we were in talks with American Airlines to build Terminal F,” Poinsatte told The Bond Buyer’s Texas public finance conference last week.
“We put this concept on the back burner for probably five more years,” he said. “What we decided to do with American is that we would add a jetty to Terminals C and A at less than a third of the cost of a new Terminal F.”
Poinsatte said the expansion will be based on need, with current doors meeting demand.
Traffic fell 94% to the lowest point of the pandemic last year, and parking revenues plunged 96%, Poinsatte said.
“We’re going to be down about 17% for May,” Poinsatte said. “I never thought in my life that I would say we’re only down 17%, but we’re only down 17%. Things are really improving.”
One project that could precede the valve expansion would be a new power plant that would cost around $ 100 million, Poinsatte said.
“Our goal is to be the world’s largest carbon neutral airport,” he said.
DFW begins the budget process with the assumption that traffic for the year will be down by around 12%, Poinsatte said.
“It will be several years before long-haul international traffic returns,” he said. “When will the business traveler come back? Some say we are facing a 30% permanent loss.
American, the dominant carrier at DFW, where its head office is adjacent to the airport entrance, reported its first cash profit in 15 months last week.
The airline said leisure travelers returned in May, particularly over the Memorial Day holiday weekend.
Despite the recovery from the same period in 2020, the airline’s total revenue is still expected to be down 40% for the second quarter compared to the second quarter of 2019.
“Given the strength of summer bookings described above and based on preliminary internal results, for the first time since the start of the pandemic, the company has generated cash for the month of May and plans to complete the second quarter with more than $ 20 billion in total cash versus its previous forecast of $ 19.5 billion, ”American wrote in a June 3 report to investors.
American last month told an investor conference that it expects fewer international flights and more focus on domestic hubs, especially DFW and Charlotte.
“We’re going to be very careful how we rebuild the international,” said Vasu Raja, chief revenue officer, noting that DFW and Charlotte’s profit margins have long been above the airline’s overall average profit margins.
The decrease in international flights coincides with the reduction of the US fleet during the pandemic. The carrier has withdrawn around 150 aircraft, including 24 Airbus A330s and 16 Boeing 767s, as well as 34 Boeing 757s.