XNA to negotiate with companies impacted in COVID-19 pandemic

Northwest Arkansas National Airport (XNA) will work with airlines, food vendors and rental car companies on their fees to provide relief in light of the COVID-19 pandemic, but it is not expected to reduce or remove them from their financial obligations.

In a special meeting via conference call Friday (April 3), the airport’s board of directors agreed to allow staff to negotiate with airlines, food vendors and rental car companies to revise agreements with the airport and bring before the board the agreements before they go into effect. However, board members didn’t want the new agreements to include abatements to their financial obligations to the airport.

Board members discussed allowing for deferrals of the obligations but were not in favor of the abatements. Board member Philip Taldo explained that federal programs to provide relief in the pandemic could allow these companies to have the money they need to continue to operate, and he favored the deferrals.

Andrew Branch, chief business development officer, was concerned about deferrals and whether the airport would be impacted negatively if a company that received a deferral were to file for bankruptcy.

“I think each of these companies are in fairly deep situations, and having the flexibility to work with each of them to make sure they’re here when this gets over is important,” Branch said. “I think a lot of them will be made whole.”

Branch explained that payments for other things like the construction of a parking deck for rental cars could be used to cover their obligations to the airport. Taldo favored using the payments going to the rental car parking deck to cover the shortfall to the airport. Kelly Johnson, chief operating officer and airport director, said the airport wouldn’t proceed with construction of the parking deck until the cash is available to build it.

Branch said the rental car companies are operating on a month-to-month agreement based on the existing contract that ended at the end of 2019. The agreement allows the companies to receive an adjustment to their financial obligations based on deplanements if the number over the past 90 days is less than 85% of the deplanements for the same 90-day period in 2013. Because of this, Branch expects their financial obligations will decline to low amounts as of June 1.

Branch also said the airport’s food vendor Paradies Lagardere laid off all employees there, except for three managers, and closed all but one location, with sales of a few hundred dollars per day. Johnson said the company had 78 employees working at the airport. However, many of the employees who were working for tips had asked to be let go because they could make more on unemployment, Branch said.

For the airlines, XNA staff considered moving money into the airline rate base account, and remove that money later as the airlines paid a higher rate to recoup that amount, effectively acting as a deferral, he said. The relief that the airport would provide the companies operating there could be tied to the enplanements, and the need for the relief could be reviewed monthly.

Board member Stan Green also asked to see financial projections for XNA for 2020 based on the impact of the pandemic. Tim O’Donnell, chief financial officer, said the impact could be $2 million per month that the airport won’t collect, but XNA should receive at least $3.1 million from the recent federal relief aid that Congress approved March 27.

In other business, board members approved to complete the checkpoint expansion with the addition of a fourth security checkpoint lane. Board members also agreed to proceed with design work for the renovation of the second floor of the terminal building. Hight Jackson Associates of Rogers will complete the work, and an assessment will be provided at the June board meeting.