included retiring its older fleet of 74 Fokker 100 jets -- some of which had been used for AA's competing service with Legend; reducing the number of flights nationwide by 9 percent; implementing a "rolling hub" strategy at their largest airports; and cutting food and other in-flight services,
Under the rolling hub concept, airlines tried to reduce waiting time for aircraft and return them to the air as quickly as possible to cut costs and generate more revenue.
DFW Airport officials tried to determine how their budget would be affected - if at all - by the possible reduction of AA flights at the DFW hub.
The bad financial news at American Airlines prompted questions from the Dallas City Coucil about the $2.6 billion expansion plans under way at Dallas/Fort Worth International Airport. Some officials were wondering if the plans needed to be scaled back.
DFW's chief executive, Jeff Fegan, made it clear to council members that expansion of DFW Airport was still just as valid then as it was during the early planning stages years ago. They were gambling that air travel would soon recover and the expansion would enable DFW to handle the increased demand.
Construction was already well under way on the new Skylink people mover system and the International Terminal D. In September, DFW Airport intended to issue an additional $375 million in bonds, which would finance the completion of Skylink and Terminal D sometime in 2005.
The Dallas Morning News reported:
At one time, D/FW was expected to become the busiest airport in the world. But without these needed new facilities, the airport has been slipping down the list. Recently, D/FW Airport fell to sixth place among airports with the most boarding passengers.
Regardless of how long it takes for American Airlines and others to recover, the airport cannot afford to slow down its building program. D/FW needs to be well positioned when the airline industry resolves the concerns of its passengers and ridership returns to normal.
Mr. Fegan said that plans for another terminal, which would be part of the overall $2.6 billion capital improvements package, will be subject to review. That is appropriate. But delaying construction projects that are already well under way is not.
By the end of October, things were getting worse. American announced it would stop buying planes, cut its domestic schedule by 16 percent and lean heavily on technology as it tried to recover from its worst financial slump ever.
AMR's CEO Don Carty also cknowledged the airline's labor costs had to stop rising, saying, "I think we clearly have to slow wage escalation or halt it for a while or even roll it back in some cases,"
By early March, 2003 there was still no relief in sight. Major uncertainties clouded DFW's horizon.
American Airlines, described by the Ft. Worth Star-Telegram as teetering on the financial high wire, losing $5 million each day, was threatening to declare bankruptcy if labor concessions weren't agreed to; war with Iraq loomed; future air terrorism attacks elsewhere were feared; costly federal security mandates had been imposed; and a slowing economy had passenger volume declining.
In spite of everything, DFW had somehow kept its title as the nation's's third-busiest airport, with 52 million passengers annually, and work had continued uninterrupted on one of the largest airport projects in the nation.
And in spite of AA's serious financial difficulties, DFW's board of directors were set to consider approving two final bond sales worth $1.6 billion.
The bond package would include $35 million to help American Airlines pay for its portion of the project, provided the airline signs a lease agreement.
The funding arrangement makes sense, said Kevin Cox, D/FW Airport's senior executive vice president, because of the airline's financial outlook and because it gives the airport more control over the terminal space.
"We're confident they'll be here for many years to come," he said of American Airlines.
Despite his rosy outlook, the end seemed like it might be near for American when their flight attendants voted against concessions that the company said were necessary to keep it out of federal bankruptcy court. AA had said that it would immediately seek protection from its creditors if it did not obtain $1.8 billion in annual concessions from its unions. AA asked the flight atttendants to reconsider their decision and DFW's bond offering was put on hold until American Airlines' fate was decided,
At the last minute, the flight attendants narrowly approved $340 million in annual wage and benefit cuts. Although it wasn't a cure for AA's problems, it did give them more breathing room to avert a bankruptcy filing.
Within days of of narrowly avoiding bankruptcy, news leaked out that AA's CEO, Don Carty, failed to disclose special bonuses and pension protections for senior executives, The unions, who had just agreed to paycuts and concessions to save the company were outraged. They felt like they were always "giving" and company officials were always "taking." The employee backlash was enough to force Carty to
resign as chairman and chief executive of AMR Corp.
Even as the Wall Street Journal was reporting that his departure might not be enough to keep American out of bankruptcy court, the DFW Board decided not only to proceed with the 1.6 billion bond offering, but to speed it up, combining what was initially projected to be two rounds of $800 million each into one offering for $1.6 billion.
Officials said it was the biggest offering by any airport since the Sept. 11 terrorist attacks and the largest ever for DFW,
DFW and American Airlines both were still gambling that air travel would make a recovery. Based on the uncertainty, was their decision rational or crazy? Only time would tell.
