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How D/FW Airport Weathers Turbulence

A 'future orientation' has helped CEO Jeff Fegan of Dallas/Fort Worth International.
Illustration by Phil Foster

Sticking with a long-range plan while crisis after crisis erupts around you is one of the big challenges facing chief executive officers. Short-term pressures invade from all directions—the economy, world events, competitors, Wall Street—and steal attention from bigger goals.

Jeff Fegan says long-term thinking has always come naturally to him. And that has served him well as CEO at Dallas/Fort Worth International Airport, where he has overseen massive terminal construction and renovation projects while the airline industry descended into tumult. Since D/FW launched construction on Terminal D in 2000, the nation’s carriers have been buffeted by the 9/11 terrorist attacks, two recessions, surging oil prices, and a string of airline bankruptcies and mergers—the most recent involving the airport’s primary tenant, American Airlines.

On the home front, Delta Air Lines decided to shut down its DFW hub, leaving nearly an entire terminal empty. And civic leaders negotiated an end to the Wright Amendment restrictions on flights out of Dallas Love Field, originally put in place to protect a fledgling D/FW. Those events would seem enough to upend almost any airport strategy. But Fegan, 59, who will retire in September after 19 years as the airport’s CEO, managed to keep D/FW on track to expand and modernize. And North Texas, which has long tied its business growth to the massive airport, is better off for it.

“I have a future orientation,” he says. “In this business, you have to be an eternal optimist.”

That took a lot of courage following 9/11. The airport was well into its $2.6 billion project to add a new terminal and the SkyLink rail system when the terrorist attacks changed air travel forever. Some community leaders suggested that the projects be put on hold, but within weeks the airport decided to move forward. “We did stop and take a deep breath and look at the facts,” Fegan says. “But I always felt we needed to move forward. I always felt it was the right thing to do.”

Terminal D opened in 2005. In recent years, a string of international carriers has launched service at DFW, including Qantas, Emirates, and KLM. American added service to cities including Madrid, Lima, Peru, and Rio de Janeiro; overall, foreign destinations have grown from 38 to 52. Meanwhile, carriers like Spirit and JetBlue brought in new domestic choices. Next up was a $1.9 billion project to overhaul the airport’s four older terminals. But just months after work began in 2011, American filed for bankruptcy. Once again, the airport decided to push ahead in the face of uncertainty.

The mega-projects have piled up a lot of debt. By the end of 2012, D/FW was loaded with $5.1 billion of fixed-rate bonds outstanding, according to a prospectus filed with the Securities and Exchange Commission. The total is expected to reach $6 billion in coming years.

Debt-per-enplanement, a standard measure of an airport’s ability to pay its bills, stands at about $165 and is expected to reach $200 this year. In downgrading the airport’s debt in March, Moody’s said D/FW’s debt level will be among the highest for U.S. airports this year.

Still, the rating agency gave DFW a “stable” outlook and mentioned its “conservative financial management” as a strength. Todd Spence, a credit analyst who follows airports for Standard & Poor’s in Dallas, said that although D/FW’s debt is high among U.S. airports, that’s often the case when expansion projects are under way. He noted that several other airports, including Miami and San Jose, have higher debt-per-enplanement measures, and said all of D/FW’s debt is fixed-rate and conservative.

“We’ve always viewed that it has had prudent financial policies in place,” Spence says. “It has been, over time, a well-run facility.”

Fegan says he doesn’t view the airport’s big-money projects as outlandish. Terminal D was needed to help lure more international flights. The older terminals are about 40 years old, he says, and need things like pipes and wiring replaced, along with the interior enhancements.

Looking back, Fegan says he has tried to practice a “hedgehog” mentality in management, as described in Good to Great by Jim Collins. That means keeping a steady focus on your core competency, or as Fegan sees it, to “plow ahead in the face of various obstacles.”

And looking forward? He thinks D/FW is in great shape and will stay so, as long as it always has enough room for airlines to grow.

“It’s hard to imagine air transportation not playing a major role in the future of North Texas and the country and the world,” he says.