WASHINGTON -- A General Accounting Office report concludes that the Denver International Airport should be "economically viable" as long as the city gets it open and operating as scheduled in late February, congressional aides familiar with the report said yesterday.
Congressional staff of the Colorado delegation, briefed last week on the soon-to-be-released report, were told "there would be no big surprises," one aide said.
Sen. Hank Brown, R-Colo., requested the report because of the numerous delays in opening the facility and because the federal government "has a substantial investment in the airport," according to a letter Brown sent to the GAO.
"Overall [the report] will be good news for Denver International," said a House staff member who asked not to be named.
The bond rating agencies are "nervous, but they all kind of come to the same conclusion that [the airport] still works even though there's been delays and even though the interest is clicking on those bonds. As long as it opens everybody is in good shape," said a House staff member.
The new Denver airport has stirred up controversy because of cost overruns and a faulty automated baggage system that has delayed opening several times. The airport is being built to replace the older and smaller Stapleton International Airport, which is scheduled to close as soon as Denver International is operational. The scheduled opening date currently is Feb. 28, 1995.
Because of Denver International's problems, bond rating agencies have been forced twice this year to re-examine the ratings on the $3.4 billion in bonds issued for the airport.
In August, Fitch Investors Service downgraded its rating to BBB-minus from BBB. Moody's Investors Service and Standard & Poor's Corp. held steady with their ratings.
Moody's maintained its conditional Baa rating because passenger demand and the need for the airport will provide adequate bondholder security and sufficient debt service coverage. The "conditional" rating is common for unfinished projects, said Maria Matesanz of Moody's.
Any further delays in opening the airport would have a negative effect on the finances, "but the project fundamentals are still there," Matesanz said
Standard & Poor's has the airport's bonds rated at BB, or below investment grade but with a developing outlook. "It will take a little more than just opening the facility," said Ernie Perez, director of the airport bond rating division at Standard & Poor's. If the operating expenses for the first six months to a year look good, Standard & Poor's will give it a more positive outlook, he said.
In late September the city of Denver, United Airlines, and BAE Automated Systems, which built the faulty automated baggage system, reached an agreement that virtually assured the timely opening of the airport.
Under the agreement, the Texas-based BAE would modify the automated baggage system, while United would pay BAE $17.5 million if the airport opened as scheduled. by Feb. 28 and an additional $17.5 million when the modifications are complete. Denver would be responsible for repaying United, which is the city's main passenger air carrier and controls about 60% of the market.
The agreement, expected to be finalized by tomorrow, also would put to rest claims that Denver and BAE have filed against each other.
"There are one or two issues left to be resolved," but it's nothing that would stop the agreement from being finalized, said Briggs Gamblin, a spokesman for Denver Mayor Wellington Webb.
"We want the airport to work. Everyone's hoping for the best, but it's just a wait-and-see situation now," a congressional aide said.