DENVER -- Although a preliminary report by a consultant said the baggage system at Denver International Airport should theoretically work, no one involved with its troubleshooting can say when or if the system will operate.
The $4 billion airport is built, but can't open until its operators can get the $193 million baggage system working. Denver International's opening was delayed in early May for the third time and no new date has been set.
The problems with the baggage system have also put plans on hold to refinance $180 million of bonds and to sell up to $100 million in new money.
Denver officials are scheduled to speak with investors in a weekly conference call today at 4 p.m. eastern daylight time. Stephanie Foote, Mayor Wellington Webb's chief of staff, said yesterday, "We're going to tell them what we said Monday: Theoretically the system could work."
Late last week Denver spoke with its German baggage consultant, Logplan, about the firm's preliminary assessment of the baggage system. Logplan told the city that "the contract requirements are reasonable," Foote wrote in a memo to city council members. The consultant also said that the baggage system theoretically can reliably meet and exceed current demands, Foote wrote.
Logplan did not present a public written report, commenting only to the city. The firm is supposed to produce a final evaluation at the end of July.
The evaluation, along with the ability of the system's manufacturer, BAE Automated Systems Inc., to solve some of the system's problems, is key to setting a new schedule of testing and an opening date. Denver needs to return to the bond market to pay for delay costs and additional capital projects and to refinance older bonds, but can't do so until an opening date for Denver International is set, city and industry officials say.
In a related development, Eaton Kenway, a Salt Lake, City consultant that was supposed to work with Logplan and BAE in assessing the baggage system, could not agree to terms on a contract with Denver. Foote reported after an city council airport committee meeting that Eaton Kenway will not be hired.
Eaton Kenway was reportedly concerned about taking on any liability connected to its advice on the system. Logplan will take on additional consulting duties as the result of the failure to reach a contract with Eaton Kenway.
One rating agency analyst wasn't ready to call the project adrift.
"I don't think [the baggage system work] is floundering. We're waiting to see what gets determined by Logplan," said Adam Whiteman, an airport analyst for Moody's Investors Service.
For the last month, BAE has been installing extra electric eyes that the system uses for routing its baggage cars, improving the track system to reduce car crashes, and developing training procedures for the system's operators.
Logplan said Denver must put the system through three phases of testing before the airport can open:
* Element testing, including loading, unloading, merge, and divert functions. Each concourse subsystem must be tested independently to ensure a high probability of success.
* Quality testing, a high-volume test using paper boxes with computer bar codes on them to test sorting, destination accuracy, and jam clearing.
* Mass, or global system test. This would prove the stability of the system, reactions to failures, maintenance response, and system re-start capacity.
While the city waits for the luggage system, it has considered opening Denver International for cargo planes. But there is a concern that such a partial opening would affect the accounting treatment of interest costs accrued before the airport opens, otherwise known as capitalized interest. Capitalized interest is recorded as an asset on the balance sheet, but can only be treated that way if an asset is considered non-producing.
Aviation director Jim DeLong is scheduled to make a recommendation on the cargo operation next week.
