http://www.thestar.com/Business/article/501966
Airport plan in holding pattern
TORONTO STAR FILE PHOTO
The Greater Toronto Airports Authority says it is pushing back plans to build a new pier at Pearson international airport.
Pearson operator cites turmoil in financial markets as next development phase is temporarily shelved
Sep 19, 2008 04:30 AM
CHRIS SORENSEN
BUSINESS REPORTER
The operator of Pearson International Airport has temporarily shelved the next phase of the airport's development amid the ongoing credit crunch and turmoil in financial markets.
The Greater Toronto Airports Authority, which recently completed a $4.4 billion redevelopment project that included a new terminal, was supposed to sit down in a few months and begin contemplating a new pier that would mainly service airlines flying to the United States.
The project is estimated to cost between $800 million to $850 million. But CEO Lloyd McCoomb said yesterday the project is now off the table because of the financial crisis centred in the United States that has put a deep freeze on debt markets.
"We were looking at starting next year with the design ... and we were thinking of starting construction by 2011 and being finished by 2014," McCoomb said.
"But all that's on full hold until we see how this thing plays out."
McCoomb's comments came as the U.S. Federal Reserve and central banks in Canada, Europe and Japan agreed yesterday to support global money markets with $180 billion.
The move was an effort to restore investor confidence as efforts continued yesterday to contain the crisis to a handful of U.S. financial firms that made bad bets on home mortgages.
As for the GTAA's existing debt load of $7 billion, McCoomb said the bonds have "performed amazingly well through all of this," which he attributed to the fact that the GTAA was an investment in infrastructure.
There are other headwinds on the horizon for the country's biggest airport.
Passenger traffic through Pearson is up more than 5 per cent this year, but McCoomb said the forecast is for a 2.5 per cent drop in passengers in 2009 because of cumulative impact of a slowing economy and historically high fuel prices on airlines.
"I'm not crowing," he said of this year's strong numbers. "I'm expecting that we're going to feel this sooner or later."
In June, Air Canada said it was cutting back on its flying by 7 per cent and slashing up to 2,000 employees in order to offset ballooning fuel bills.
Then, last month, Ottawa-based Zoom became the latest Canadian carrier to shutter operations and file for bankruptcy protection, citing high fuel prices and "aggressive" creditors.
McCoomb noted that the GTAA cut landing fees charged to airlines this year by 3.1 per cent and terminal fees by 4.7 per cent – the first time in the authority's history that fees were reduced.