Dallas Fort Worth International Airport plans to expand two existing terminals rather than build a brand new one as traffic continues to grow back from the COVID-19 pandemic, said Chief Financial Officer Chris Poinsatte.
“Pre-COVID, we were in discussions with American Airlines to build a Terminal F,” Poinsatte told The Bond Buyer’s Texas Public Finance Conference last week.
“We mothballed that concept for probably five more years,” he said. “What we decided to do with American is that we would add a pier on Terminal C and Terminal A at less than a third of the cost of a new Terminal F.”
Poinsatte said the expansion would be based on need, with the current gates meeting demand.
Traffic fell 94% at the lowest point of the pandemic last year, and parking revenue plunged 96%, Poinsatte said.
“We’re going to be down about 17% for May,” Poinsatte said “I’ve never in my life thought I would say we’re only down 17%, but we’re only down 17%. Things are really getting better.”
One project that could precede gate expansion would be a new central utility plant that would cost about $100 million, Poinsatte said.
“Our goal is to be the largest carbon-neutral airport,” he said.
DFW is beginning the budget process with the assumption that traffic for the year will be down about 12%, Poinsatte said.
“It will be a number of years before the international long-haul traffic comes back,” he said. “When will the business traveler come back? Some say we face a permanent loss of 30%.”
American, the dominant carrier at DFW where its corporate headquarters are adjacent to the airport entrance, announced its first cash profit in 15 months last week.
The airline said leisure travelers returned in May, especially over the Memorial Day holiday weekend.
Despite the recovery compared to the same period in 2020, the airline's total revenue is still expected to be down 40% for the second quarter compared with the second quarter of 2019.
“Given the strength of summer bookings outlined above and based on preliminary internal results, for the first time since the pandemic began, the company generated cash for the month of May and expects to end the second quarter with more than $20 billion of total liquidity versus its previous guidance of $19.5 billion,” American wrote in a June 3 investor report.
Last month, American told an investor conference that it expects less international flying and more concentration on domestic hubs, particularly DFW and Charlotte.
“We’re going to be really cautious how we build back international,” said chief revenue officer Vasu Raja, pointing out that profit margins at DFW and Charlotte have long been higher than the airline’s overall average profit margins.
Less international flying coincides with the reduction of American’s fleet during the pandemic. The carrier has retired about 150 aircraft, including 24 Airbus A330s and 16 Boeing 767s, along with 34 Boeing 757s.
