American Airlines lease extended in Fort Smith

Fort Smith Regional Airport commissioners approved a five-year extension to the airport’s agreement with American Airlines Tuesday night (Nov. 27) at the board’s monthly meeting.

The new lease will run for a base period of three years with two automatic one-year renewal periods. The previous agreement expired April 30.

The news comes almost one year to the day from Nov. 29, 2011, when American Airlines announced it would be seeking Chapter 11 bankruptcy reorganization.

Changes to the lease are minimal and include “updated language and name changes,” but rates will remain at current levels through the end of 2017, according to Fort Smith Regional Airport Executive Director John Parker. “American has paid the airport all the outstanding balances included in their 2011 bankruptcy filings,” Parker added.

In past months, the company has worked through thousands of flight cancellations resulting from an increase in maintenance reports from pilots and other employees.
Management at American has blamed some of the cancellations on a union effort to gain leverage in contract negotiations. The delays and cancellations have seen some consumers and travel agents book with other carriers to avoid the uncertainty.

American recently announced it would cancel about 1% of its daily flights — roughly 35 out of its 3,500 total — to “improve operational reliability.”

Still, the struggles don’t appear to be affecting Fort Smith Regional. American Airlines is the most active carrier at the airport. The airline has 42,731 enplanements out of Fort Smith for the first 10 months of 2012, up over 41,815 during the 2011 period.

Airport financials through October showed operating revenues stumbling from where they were during the first 10 months of 2011. The airport logged $2.234 million against $2.238 million last year, but still managed to beat operating expenses, which for 2012 are at $1.922 million compared to $1.937 million through the first 10 months of last year.

Total revenues across all departments registered at $3.127 million against $2.995 million year-to-date.

Finally, the commission passed a $6.022 million budget for 2013. Approximately $2.708 million will come on the operating side while around $3.314 million will go to the capital budget.

The budget approved Tuesday was identical to the draft budget presented in October with one small exception. Insurance coverage numbers were adjusted downward to $98,700 from $112,000 after actual invoices were received, Parker said.

The next meeting of the Fort Smith Regional Airport Commission will take place on Dec. 18.