DALLAS — Dallas/Fort Worth International Airport may have to issue more debt to complete a $2.3 billion terminal renovation effort or curtail the scope of the project.
Airport trustees took no action when informed Sept. 4 of $221 million of unexpected costs on renovations to three of the airport's oldest terminals. Work on a fourth terminal, mainly occupied by American Airlines, has been halted by the carrier's bankruptcy and attempted merger with US Airways.
DFW Airport issued $367 million of revenue bonds in June to fund the Terminal Renewal and Improvement Program. The outstanding debt totals more than $6 billion.
The bonds are rated A2 by Moody's Investors Service, A-plus by Standard & Poor's, and A by Fitch.
The additional costs of the terminal work are due to a number of factors, said Perfecto Solis, the airport's development and engineering chief, most of which the airport cannot control.
Labor costs are $36 million more than predicted, he said. Planners had figured for annual increase in labor costs of 3.5% but those costs are going up 7% a year in north Texas's busy construction industry.
Unexpectedly large amounts of asbestos were uncovered in the renovation of Terminal B, Solis said. That added $48 million to the project costs. Another $20 million was needed for contractor schedule changes required by the additional asbestos removal.
Changes in building codes and construction requirements put another $36 million on the tab.
Work related to terminal and airport operations total $72 million of the overrun total, Solis said, and those efforts could be reduced or eliminated if necessary.
DFW International Airport is in the middle of a $4.2 billion capital improvement program that will produce more than $6 billion of peak debt outstanding. The largest component of the capital program is the renovation of the terminals, which were built in 1974.
The terminal project is to be completed by 2018.
Trustees did authorize at least $375 million of new bonds at the Sept. 4 session.
A $250 million issue will refund outstanding debt issued in 2003 to fund the airport's SkyLink terminal shuttle train system and a $125 million new-money tranche will fund non-terminal projects.
Trustees also authorized a refunding of unspecified maturities of bonds issued 2003 that were not considered economical in a refunding earlier this year.