Archive for Thursday, October 23, 2003

American Airlines to keep K.C. base

Wide-body plane work to continue at K.C.I.

October 23, 2003


— American Airlines Inc. will keep open its maintenance base in Kansas City, Mo., after state and local leaders agreed to provide more than $80 million in bonds and tax credits to upgrade the facility, the company and local officials announced Wednesday.

American had considered closing one of its three maintenance operations because it had reduced the size of its fleet. The airline had previously said it would add jobs at the Tulsa, Okla., base, and said Wednesday it would maintain the size of its operation at the Fort Worth, Tex., airport.

American agreed to a 25-year lease extension for the hangar in Kansas City, where 2,300 workers conduct maintenance on its wide-body planes, Mayor Kay Barnes said.

David Campbell, American Airlines vice president for base maintenance, said the deal means American will be in Kansas City "for a long, long time."

The city and state agreed to give the company incentives that include about $44 million in revenue bonds to be used primarily for wide-body hangar improvements and about $5 million of marketable tax credits for asbestos remediation, Sage said.

The city, which owns the overhaul base, also agreed to provide American an additional $35 million, probably in revenue bonds, if necessary. Gary Sage, senior vice president of business development for the Economic Development Corporation of Kansas City, said whether the city provides those funds depended on American's future financial condition.

AMR Corp., the parent of American Airlines, on Wednesday reported a $1 million third-quarter profit, breaking a string of losses at the world's largest carrier that began more than two years ago.

Sen. Kit Bond, R-Mo., said Wednesday that he would follow through on a pledge to seek $5 million in federal funds to help upgrade the base.

"I salute those employees and the city for their efforts," Bond said.

Sage said American generates $3 million per year in tax revenue for the city and "substantially more" for the state.

"What we're giving up through this negotiation is much less than that $3 million a year. So we're happy with it from a fiscal impact statement," he said.

American plans to phase out its narrow-body maintenance operation at the Kansas City base. Layoffs are not expected immediately, the company said, because some jobs will be lost through attrition.

Local officials said they hoped layoffs would not be necessary.

"The question is will they have a sufficient amount of work to maintain that narrow-body portion of the facility. And our hope is that their circumstances have improved enough that we may be able to hold it," Sage said.

Democratic Gov. Bob Holden, who is facing re-election next year, including a challenge from within his own party, declared Wednesday's announcement a victory "in our fight for Missouri jobs."

"We were given the impression months ago that this was a done deal, this was gonna close down," Holden said. "So this is a tremendous accomplishment just to make sure that we keep it open and keep it moving forward."

Meanwhile, state and local leaders praised base workers at a news conference Wednesday afternoon.

"While we were able to offer state and local incentives to American to keep this facility open, it was the workers, the productivity of the workers, that tipped the balance to make this day happen," Holden said.

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