Two years after a failed effort to rebuild Denver International Airport’s terminal through a public-private partnership, the project’s first phase of the so-called “Great Hall Project” is complete.
“The improvements in this first phase are just the beginning of a major transition of the Jeppesen Terminal that will ultimately prepare DEN [Denver International Airport] for the future,” said Denver Mayor Michael Hancock.
When the international construction and banking consortium known as Great Hall Partners withdrew from the project in a dispute over the quality of existing concrete, the city was forced to make payments while looking for a new contractor.
Construction and engineering giant Hensel Phelps was hired in December 2019.
“Since hiring Hensel Phelps, we have met every milestone and are on schedule and under budget,” said airport chief executive Phil Washington. “This first phase was most impactful as we were working in the center of the terminal.”
Early completion came despite another “black swan” event in the form of the COVID-19 pandemic that virtually wiped out air traffic at the busy hub airport.
In the worst month, April 2020, traffic fell 95%, according to airport records.
By the end of 2020 about 16.9 million passengers had boarded, a 51% drop from the 34.5 million of the previous year.
In May, airport chief executive Kim Day announced her retirement after a bout with cancer.
Day, who was appointed CEO in April 2008 under then-Denver Mayor John Hickenlooper, was replaced by Washington.
“Experiencing breast cancer made me think about reducing stress and retiring last year, but then COVID-19 hit. I felt the responsibility to lead the airport through the pandemic and leave it in a strong and financially healthy place with major capital projects on target to meet their budget and schedule goals,” Day said in the news release announcing her retirement.
Under Day’s leadership, passenger traffic grew from 51.2 million to a pre-pandemic high of 69 million annually. Revenue has grown from $842 million to $1.2 billion.
Instead of retreating from plans to remodel the terminal and expand gates in the face of the pandemic, Denver accelerated the schedule, issuing bonds to finance the effort.
At the end of the 2020 fiscal year, the airport’s 25th year of operations, outstanding debt came to $5.5 billion.
The airport’s $3.5 billion capital program included a $770 million remodel of the Jeppesen Terminal under the public-private partnership.
In 2018, Great Hall Partners, the consortium working on the terminal, discovered substandard concrete in the terminal’s existing structure, prompting negotiations about how to proceed. When the two parties could not agree to terms, the airport halted the deal.
In March 2020, the airport made a final $55.5 million payment to settle the $290 million in claims filed by Great Hall Partners. That was added to the $128.1 million paid in December 2019. The airport has reimbursed Great Hall Partners $183.6 million, which was in the range of $170 million to $210 million officials announced at the termination.
On March 10, three days before the pandemic emergency was declared, the airport announced that the new contractor Hensel Phelps would resume construction of the Great Hall Project that week.
After traffic fell 95% in April, the airport announced plans to accelerate its $1.5 billion gate expansion, using $560 million of existing bond funds. The bond proceeds came from a $2.1 billion issue in 2018.
The airport suspended airline payments for its gates from April through June. Car rental companies were relieved of minimum annual guarantee payments from April through the end of the year and were charged only a percentage of sales.
Coronavirus relief funds the federal government showered on airports had a major impact on the airport’s finances.
On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act stimulus package awarded funds to airports based on boardings and other metrics related to cash reserves and debt service.
By the end of 2020, the airport had received $262.7 million in CARES Act funding.
The Coronavirus Response and Relief Supplemental Appropriation Act in December 2020 provided added relief.
Worldwide in 2020, nearly 6 billion passengers avoided airports due to the pandemic, a decline of 62%, accord to Airports Council International.
With the new Omicron variant of the COVID virus surfacing worldwide, officials are bracing for an uncertain future.
“Despite some positive signs and news, COVID-19 remains an existential crisis for airports, airlines and their commercial partners and the aviation industry needs support and practical policy decisions from governments,” the council noted in a July report.
Denver’s plans are built around a future that envisions 100 million passengers using the airport in a decade.
“This first phase is just one piece of a larger puzzle that will help DEN prepare for the future and reach 100 million passengers,” Washington said. “Currently, DEN is the fastest recovering large airport hub in the U.S., based on operations and passenger traffic and is the third busiest airport in the world.”
Work on Phase 2 of the Great Hall project started in July and will improve security operations. The new security checkpoint will have improved technology and a new queuing concept that will provide more effective and efficient security. Phase 2 work is expected to be complete in mid-2024.
In October, S&P Global Ratings lifted its outlook on Denver International Airport’s A-plus airport system revenue bond rating to positive from stable.
“The outlook revision reflects our view that DEN is well-positioned to return to its strong pre-pandemic financial performance as the enplanement recovery continues through 2022 and into 2023,” said S&P analyst Andrew Bredeson.
“In addition, DEN’s progress toward completing phases 1 and 2 of the Great Hall project and the ultimate resolution of its prior dispute with the project’s former private developer has removed a material degree of uncertainty we had considered an offsetting credit risk.”
Fitch Ratings revised its outlook to stable from negative on the Denver airport’s senior-lien bonds in August, as part of a sectorwide action on 18 large U.S. airports recognizing diminishing fiscal risks from the pandemic.
Moody’s cut the outlook on its A1 Denver airport rating to stable from positive in April 2020, as the pandemic set in.
The week of Thanksgiving, Nov. 22-28, about 425,000 travelers passed through the airport’s security checkpoints. Traffic for the week was down 7% vs. the same week in 2019, officials said.