Title
American Airlines Passenger Boarding Bridges (Ordinance S-46937)
Description
Request to authorize the City Manager, or his designee, to purchase seven passenger boarding bridges (Bridges) from American Airlines in exchange for $4.1 million in rent credits under American Airlines' leases at Phoenix Sky Harbor International Airport (Airport).
Report
Summary
American Airlines currently leases 25 passenger boarding bridges as part of its Terminal 4 operations at the Airport. The bridges are of varying age and condition. The bridges are owned by the City of Phoenix and were installed in 1990. The bridges have frequent mechanical failures that lead to aircraft delays. As an integral part of American Airlines’ operation, it has proposed the structure of this transaction in order to actively manage the Bridge specifications and installation. American Airlines is also able to quickly purchase the Bridges at a significant discount due to its purchasing volume. If approved, the Aviation Department will purchase the Bridges from American Airlines with rent credits in the amount of $4.1 million that will be applied to its leases at the Airport. The City will then lease the Bridges to American Airlines at the rate of $3,014 per month per Bridge.
Contract Term
The term of the lease for each Bridge will be month-to-month and will be consistent with American Airlines' lease of the associated gate.
Financial Impact
$4.1 million in rent credits will be amortized over the 30-year life of the Bridges at the imputed interest rate of 4.7 percent and charged to American Airlines at the rate of $3,014 per month per Bridge.
Concurrence/Previous Council Action
- This item was recommended by the Phoenix Aviation Advisory Board on Aug. 20, 2020.
- This item was recommended for approval at the Transportation, Infrastructure and Innovation Subcommittee meeting on Sept. 2, 2020, by a vote of 4-0.
Location
Phoenix Sky Harbor International Airport, 3400 E. Sky Harbor Blvd.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Aviation Department.