Frontier nears hangar decision
Airline could build new structure, take over Continental's
Chris Walsh, Rocky Mountain News
Published August 15, 2006 at midnight
Frontier Airlines hopes to decide within a month whether to build its own maintenance hangar in Denver, a project that would cost an estimated $30 million to $40 million.
The carrier subleases about two-thirds of Continental Airlines' 84,000-square-foot hangar near Denver International Airport under a contract that expires in February.
Frontier has been considering for years whether to build a hangar near the airport specifically for its needs. The homegrown airline also is exploring the possibility of taking over the entire facility from Continental and negotiating a new lease with DIA. That would free Continental of its obligations related to the hangar.
Frontier, Denver's second-largest carrier, said it wants to make a decision well before its current sublease expires.
"We've got to have a plan of some sort in place soon," said Frontier spokesman Joe Hodas. "That doesn't mean we have to have something built in February, but we at least need to decide if we'll take that path."
Frontier did not say how it would finance a new hangar, although analysts said cost is not a concern from an investment standpoint.
Keeping the carrier's 200-employee heavy maintenance operations is important for the city and the airport, as it means Denver would keep and add high-paying jobs as the company grows.
Frontier previously said it was considering building a hangar in another state but now says it's only considering options in the Denver area.
The carrier has leased space in Continental's hangar since the mid-1990s, using it for heavy maintenance work that involves comprehensive checks, major repairs and a complete strip-down of the plane's interior.
Continental built the facility when it had a large presence here, financing the more-than $40 million pricetag through airport bonds. The carrier pulled most of its flights from the city in the mid-1990s.
The bonds related to the hangar still have a remaining balance of about $29 million, and the airline has $3 million in scheduled upcoming payments this year.
Continental spokesman Dave Messing said the company is exploring a range of options for the hangar but declined to comment more specifically.
"We don't have details to discuss on that right now," Messing said.
Continental's lease runs until 2018, but Frontier has discussed with the airport a deal that would involve extending the term out another seven years, DIA officials said.
One reason Frontier might want to build its own facility: The hangar was built for lighter maintenance on larger planes than Frontier flies, meaning the company would have to make some changes if it planned to be there long-term.
"It's just not really configured right" for what Frontier is doing, said Stan Koniz, DIA's chief financial officer.
Frontier recently hired an outside firm to study what changes and repairs would be needed - and how much they would cost - if it stays in the hangar.
In addition to heavy maintenance, Frontier uses the hangar space to repair things such as seats and seatbacks and build equipment the airline needs.
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