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NFTA could lose money from Delta, Northwest bankruptcies

This week's bankruptcy filings by Northwest and Delta Airlines could cost the Niagara Frontier Transportation Authority $436,000.

NFTA Executive Director Lawrence Meckler said that as of Wednesday, the day both airlines filed for federal Chapter 11 bankruptcy protection, Delta's outstanding charges totaled $231,000, while Northwest owed $205,000.

The outstanding balances include the prior month's landing fees, gate rental and other service charges.

Deborah Leous, the NFTA's chief financial officer, said, "These are charges we can't collect from them. They'll have to be handled through the bankruptcy proceeding and it will be up to the court to decide how much they'll have to pay their creditors."

While the transportation authority will have to wait several months for the bankruptcies to play out, it will be able to bill both airlines for all new charges they accrue.

"The bankruptcy doesn't affect payments going forward. The only amounts that are not collectible are the current charges," she added.

This is not the first time the NFTA has faced a gap in airline fee payments due to a corporate bankruptcy.

When US Airways went through its first bankruptcy in 2002, it bounced a check for $270,000 and owed another $300,000 in airport fees. Following its second filing in 2004, it owed $260,000. United Airlines owed the authority $94,000 at the time of its 2002 trip to bankruptcy court.

The good news for the NFTA is that in both cases, it eventually was paid in full through the bankruptcy proceedings.

"We were very fortunate to recoup the entire amount owed," Leous said. "Because we don't know what will end up happening with Northwest and Delta, we'll reserve the full amount just in case and hope for the best."

Meckler said while no service interruptions are anticipated due to the airlines' fiscal woes, it is something the authority will closely monitor.

"Delta and Northwest comprise about 20 percent of the our enplanements, so they are an important component of local service. We would not want to lose any of their flights," Meckler said.

The NFTA did suffer nominal losses when discount carriers Vanguard and Shuttle America faltered in 2001.

Minneapolis-based Northwest, which links Buffalo travelers to West and Midwest destinations via Detroit and Minneapolis, currently offers 46 weekly outbound flights. Delta, headquartered in Atlanta, has 70 weekly outbound flights, primarily to Southern and Western markets through Cincinnati and Atlanta.

Delta and Northwest sought protection from creditors in U.S. bankruptcy court in New York on Wednesday as debts and costs mounted. Soaring fuel prices and competition from low-fare carriers such as Southwest Airlines have left the companies with billions of dollars of losses since 2001.


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