Earlier this year, investors had their doubts about American Airlines and the company's commitment to having a maintenance base in Tulsa, according to financial news organization The Bond Buyer.
But agreements with stakeholders in the bonds have at least somewhat affirmed American Airlines plan to keep maintenance operations in Tulsa.
"I'd say there's nothing certain, but it's certainly a good sign," said Jeff Mulder, airport director for the Tulsa Airport Authority. "Especially when you consider that American has a maintenance base in Fort Worth which they did decide to close."
The Vision2 sales tax renewal proposal before voters Nov. 6 has been pitched as a way to generally boost and maintain aerospace operations in Tulsa, along with a separate proposition related to "quality-of-life" projects. The proposal sets aside $254 million in sales tax dollars for use to upgrade city-owned facilities at the airport's industrial complex, where American Airlines, IC Bus and Spirit AeroSystems are tenants.
"There are a lot of tenants there, but what distinguishes these are these are city-owned facilities. All the other facilities are owned by the tenants themselves," Mulder said.
Spirit AeroSystems employs about 2,775 workers in Tulsa, and IC Bus employs about 1,200 workers. American Airlines employs roughly 7,000 in Tulsa.
  JEFF MULDER |
While Mayor Dewey Bartlett has downplayed any ties between Vision2 and the prospects of American Airlines, Tulsa County Commissioner Fred Perry said Vision2 has to do with "the whole idea of saving the jobs at American Airlines by improving the facilities there so that they can work on the next generation ... of airplanes that are coming," Perry said. New planes "have larger tail sections and cannot fit into the old hangars," he said.
The parent company for American Airlines filed for bankruptcy in November.
City leaders, along with investors, undoubtedly paid close attention to how the airline proceeded with its debts related to special facilities bonds, including bonds issued by the Tulsa Municipal Airport Trust.
In bankruptcy, a struggling company seeks to minimize their debts. In the case of American Airlines, $237.6 million in bonds are out there -- though not necessarily being traded -- after they were issued on behalf of American Airlines through the Tulsa Municipal Airport Trust, according to The Bond Buyer. The total involves three separate issues, most recently in 2000.
The city owns the property where American Airlines has its primary maintenance operations. Some buildings are World War II-era construction handed over to the city, while others were built with the help of bonds.
"TMAT issued bonds on behalf of American Airlines to build these buildings and American paid the interest and principal on those bonds over this time period," Mulder said.
In March, The Bond Buyer describing how investors "have ascribed less value to the Tulsa bonds than other secured American debt."
The publication quoted from a report by Trident Municipal Research: "We do not have confidence this facility will go unscathed and in the event AMR rejects the lease we see difficulty in re-letting the facility." Mulder stressed that the Tulsa Municipal Airport Trust would not have been on the hook for the debt payments.
American Airlines made several requests to the Tulsa Municipal Airport Trust to extend deadlines related to the lease agreement. Ultimately, an agreement was hammered out involving not only American Airlines and the trust, but also bondholders, which include Bank of Oklahoma and Bank of New York Mellon. A notice of a partial agreement was posted by the Municipal Securities Board on July 20.
But it wasn't until Aug. 6 -- just three days before a formal presentation to county commissioners about Vision2 -- that documents filed in bankruptcy court indicated an agreement by all stakeholders.
Don Walker, co-chair of the campaign for Vision2 and also president and chief executive officer of Arvest Bank, wrote in an email that the timing of the Vision2 presentation "was not at all based on the settlement agreement with American Airlines."
Perry also said that he was not following bankruptcy proceedings closely in early August. Rather, he said that timing of the proposal was related to details being worked out about the second proposition, the so-called "quality-of-life" initiatives.
Such bonds likely aren't an option in the future for American Airlines; as noted in a November report by Reuters news agency on American Airlines bonds, such special facility revenue bonds "plummeted in popularity after United Airlines defaulted on $1.1 billion of the debt when it filed for bankruptcy protection in 2002."
Even apart from the bankruptcy proceedings, the trends in airline maintenance seem a bit of a mixed bag.
"All the airlines that operate in the United States will be required to do some maintenance on an ongoing basis in the U.S. It's just a necessity that they would have to do it," said Joy Finnegan, editor in cheif of Aviation Maintenance magazine. "Line maintenance and unforeseen maintenance and things like that, that's never going to go away."
But she said airlines now sometimes look to save money by outsourcing maintenance operations. Sometimes "C-checks" -- lengthy and time-consuming procedures -- are done at facilities in Mexico, Central America and South America.
And any new airplanes are tending "to be less maintenance-heavy, so you can fly it for a longer period of time before it needs a check," said Finnegan.
"I think every airline that's operating today has to look very closely at the cost to maintain the equipment, the personnel and the facilities that they need to do this type of heavy maintenance, and many of them are making the decision to outsource that work to other companies. It's a trend. It's probably not going to go away anytime in the near future," Finnegan said.
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