boston.com Business your connection to The Boston Globe

Court lets Logan reassign Delta gates

Delta Air Lines' bankruptcy has left Terminal A at Logan Airport with unused gates, which the airport expects to rent out soon. (CYRUS MOGHTADER/FOR THE BOSTON GLOBE/FILE 2006)

Logan International Airport can bring in other carriers to fill nine of the 25 slots at Delta Air Lines Inc.'s $500 million Terminal A, under the final terms of a US Bankruptcy Court deal.

Just which airlines might move into Delta's new and gleaming -- but half-empty -- terminal is unclear. But continued expansion at Terminal C by fast-growing JetBlue Airways Corp. could push its current neighbors, Continental Airlines and Midwest Airlines, to seek space elsewhere. Another fast-growing tenant at Terminal C, AirTran Airways, has also been looking for more gate space but has said it worries the Delta terminal could be too expensive for its low-fare business model.

All of those airlines had no comment yesterday on whether they want to move to Terminal A.

Under the agreement, Logan can bring in other airlines to fill six of the 18 big-jet gates and three of the seven regional-jet slots at Terminal A.

In December, the Massachusetts Port Authority, Delta, and the company that insured the bonds Delta sold to pay for the terminal, Ambac Assurance Corp., reached a preliminary deal to rework Delta's financial obligations for Terminal A, as part of its Chapter 11 bankruptcy restructuring. Delta agreed to give up control of more than one-third of the terminal.

What's new in the final terms is the number of gates Massport can take over from Delta and lease to other airlines. Massport, which has an annual budget of over $400 million, also takes on the liability of covering roughly $10 million a year in terminal rent and maintenance costs formerly paid by Delta if Massport can't lease the gates.

But Massport's executive director, Thomas J. Kinton Jr., said, "We fully expect the terminal to be rented out" within several months. He added that having Massport control the gates increases the odds of new tenants being found. "Airlines generally prefer for us to be the landlord rather than dealing as sublessors from Delta or another airline, because there's always uncertainty associated with that," including the risk of Delta's taking gates back to accommodate growth, he said.

The only other vacant gates, Kinton said, are two on the American Airlines side of Terminal B that were used by America West Airlines before it merged with US Airways in late 2005.

Doug Blissit , a Delta vice president, said the airline was pleased to have the deal closed. "This was a necessary step in Delta's transformation, allowing us to achieve our restructuring goals," he said, "while maintaining our commitment to the community and customers as Boston's largest carrier," ranked by seating capacity.

Kinton said Massport will never be liable for covering interest and principal on the $497.8 million in bonds Delta sold through Massport to build the terminal, which opened in March 2005. Interest payments on the part of the terminal Delta has vacated are now being made from a special reserve account funded by Delta. Once that's exhausted, Kinton said, if no airline has moved in to cover the bonds, Ambac will pay.

Peter J. Howe can be reached at howe@globe.com.

SEARCH THE ARCHIVES