Delta wants longer lease at Salt Lake City airport in deal that could help pay for expansion

Airport’s biggest user committing for long haul, director tells board. <br>

(Francisco Kjolseth | Tribune file photo) This September 2017 photo shows work on a $3.6 billion expansion project at Salt Lake City Airport, which will see three aging terminals replaced by a single central terminal building and two new concourses with 78 inside gates. The terminal is slated to open in August 2020.

Delta Air Lines wants a 10-year extension on its lease at Salt Lake City International Airport through 2034, a long-term commitment that airport officials said Wednesday includes a pledge to cover any shortfall in debt payments on the airport’s $3.6 billion renovation.

The lease extension has yet to be finalized and approved by the airline’s board, airport executive director Bill Wyatt told the airport’s advisory board Tuesday.

“But having this executive commitment is extraordinary,” he said. “The importance of that is an upfront, unambiguous commitment by our largest carrier, and presumably the other carriers, to pay for this project.”

The airport is a hub for Delta, which accounts for 70 percent of its air traffic. A spokesman in the airline’s Atlanta headquarters declined comment Wednesday, saying the matter was not final or approved.

When complete, the new airport will have two new concourses with 78 gates and room for 15 more. A new main terminal and first new gates are slated to open in August 2020, with final work done by 2023 or 2024.

The $3.6 billion price tag represents an increase from earlier estimates. Costs for airfield paving and systems are higher, Wyatt told the board: Reinforced construction and safeguards to maintain uninterrupted operation include installation of fueling, electrical and other systems that Wyatt likened to “a high-rise building that just gets laid on its side.”

He said the scope and cost of the project could continue to grow based on the desires of the airlines, which “keep coming back to us and saying make it bigger.” Delta’s lease extension would include a commitment to cover any shortfall in interest payments on the $1 billion bond issued to help finance the work.

“I wouldn’t be a bit surprised if Delta comes to us sometime over the course of the next 12 months and says, ‘What the heck… We can see a need to do this’,” he said.

There are nearly 1,000 workers now on the project, a number that could swell to more than 1,600 later this year, Mike Williams, the terminal redevelopment program director, told the board.

The expansion is being financed by user fees — airlines, concession operators, and travelers. Passenger traffic has risen steadily since mid-2013 by roughly 5 percent or 1 million passengers annually. Total passengers for the fiscal year that ended last June 30 was 23.7 million.

Financial statistics presented to the board Wednesday show that more than two-thirds of the airport’s $155 million in operating revenues last year came from non-airline sources — concessions, leases and a tax on aviation fuel.

Of the $82.5 million in concession revenue, 80 percent came from parking, ground transportation and car-rental firms.