DENVER -- United Airlines may end up paying nothing for the delay of Denver International Airport, pending ongoing talks between the airline and the city, officials said yesterday.
Talks between the two sides are continuing, but United has made requests that the city says it cannot agree to. United wants those unspecified items in return for paying half of the $45 million it will cost to delay the airport three months from May 15.
"United stood up at a press conference and said they agreed to pay their share of the delay. When we sat down and asked for that commitment, they made requests that weren't acceptable to us," said Denver revenue manager Patricia Schwartzberg in a telephone interview yesterday.
"Unless we can resolve that, we won't take their money," Schwartzberg said, without revealing any details of the discussions.
Trading in Denver airport bonds appeared to reflect the uncertainty. Three trades occurred, showing lower prices for the Denver airport bonds while the rest of the market was up 1/2 point, traders said.
A $5 million block of 6 3/4 0/0 bonds maturing in 2022 traded at 7.60%, up about five basis points. A $6 million block of 7 3/4 0/0 bonds maturing in 2022 traded at 7.60%. And a $1.3 million block of 8% coupons of 2025 bonds traded at 7.70%, market sources said.
Schwartzberg said the Denver airport system budget has $400 million in reserves to use before the city has to go back to market. Denver plans to refund $180 million in 1985 system bonds on Aug. 1, and possibly issue more debt to pay for capital improvements or the delay. The city has presented scenarios of up to $100 million in new money.
"Regardless of what happens with United, we have the resources to pay for the delay," she said.
Schwartzberg allowed that Denver may decide to postpone the Aug. 1 refinancing. A second refinancing of $70 million in 1984 debt with an average interest cost to Denver of 10.5% is scheduled for December.
"It could be we decide to do nothing Aug. 1. We could postpone it. We are assuming no United money to handle a period of the delay and beyond," Schwartzberg said, adding that until Denver knows how long the delay will be, she cannot make a financing decision.
She said Denver must decide on a financing plan by mid-June to late June.
United Airlines spokesman John Philp did not return telephone calls for comment yesterday and Wednesday.
Rating agency analysts were not available for comment. Standard & Poor's Corp. analyst Todd Whitestone has said the delay costs are an important rating factor. The agency downgraded $3 billion in debt to BB last week.
Moody's Investors Service still rates the bonds investment grade, at Baa, but the rating is conditional depending on the airport's opening. It has been delayed four times. Fitch Investors Service rates the bonds BBB and has placed them on Fitch Alert with negative implications.
One trader said yesterday the bonds are still trading off of the Moody's rating.
"The key to the board is what Moody's does over the next two months. The selling has been very light to date. Things are going to get a little worse before they get better," the trader said.
Another market source, noting the Denver bonds were trading off, said, "There seems to be a realization this could take a while longer than people hoped for."
