United plan could leave city holding $100M bag By Marilyn Adams, USA TODAY Near Indianapolis Airport, a once-bustling United Airlines facility soon will be a 1.7 million-square-foot white elephant. The Indianapolis Maintenance Center was the crown jewel of United Airlines' respected maintenance program: a 24-hour, state-of-the-art facility for complex "heavy" maintenance on single-aisle Boeing and Airbus jets. In its heyday in the late '90s, the center employed almost 3,000 people. It was a source of civic pride for Indianapolis, which outbid nearly 100 cities to get the 7,500 high-paying jobs that United promised would be there by 2004. Indianapolis and Indiana shouldered most of the $540 million project cost. United's maintenance centers United maintains its aircraft in three major facilities around the USA. Under a tentative agreement with the mechanics union, centers in Indianapolis and Oakland could be closed.



San Francisco



United's largest maintenance center at San Francisco International Airport has:

129 acres of land

3 million square feet of floor space

12 aircraft hangar docks

3,610 employees{1} Indianapolis United's Indianapolis Maintenance Center has:

300 acres

1.7 million square feet

12 hangar docks

3,000 employees{1} Oakland United's maintenance center at the Oakland airport has:

44 acres

380,000 square feet

4 hangar docks

684 employees{1} 1  as of Dec. 31; Source: UAL 10-K report for 2002 to Securities and Exchange Commission Now, with United parent UAL in bankruptcy court and the nation at war, city and state officials in Indianapolis are learning how high a price communities can pay when big companies they woo run aground. United has announced it is closing the center for a few months to cut costs, but the closure could well be permanent. In a bid to slash maintenance costs, United has negotiated labor contract changes with its mechanics union that would let the airline contract out all heavy maintenance work and shut the Indianapolis and Oakland centers where United mechanics perform that work. The agreement would require only United's San Francisco maintenance base to remain open. Members of the International Association of Machinists (IAM) will vote on the controversial changes April 29. If they vote no, United's lawyers will ask a bankruptcy judge for his blessing to break the old IAM contract. So Indianapolis, along with Chicago, Denver and many other communities where United has facilities and owes money, is now a creditor in bankruptcy court. Indianapolis claims it is owed as much as $100 million for United's failure to create the 7,500 jobs agreed to as a condition for the investment. "Ten years ago, no one questioned United Airlines," says Melina Maniatis Kennedy, Indianapolis' economic development director. "Any city would have vied for 7,500 jobs." Opened in 1994, the center was Indiana's "most significant economic development project of the '90s," recalls Mark Moore, the state's chairman of transportation finance. "Our expectation was that this was a good investment." So it seemed then. "It was a state-of-the-art facility for the whole industry," says United spokesman Joe Hopkins. "It was well lit, spacious, clean. When this was designed, we sent a team around to other large plants, like Saturn, to learn best practices. It was a showplace." Government assistance helped United in two ways. Indianapolis and Indiana sold bonds to finance about 60% of the project. But United also was never charged real estate taxes on the property, which is airport land. At one time, the company lauded the Indianapolis center as a model of productivity and economic efficiency compared with its other maintenance centers in San Francisco and Oakland. Annual ground rent to the airport authority runs about $697,000, a fraction of the company's cost in California. United's rent payments are current, but local officials seem more concerned about idling thousands of highly skilled mechanics amid the recession, perhaps permanently. "The real impact for us is the loss of jobs," Kennedy says. Only a few hundred workers and a couple of Boeing 737s remain. By early May, the center will close. United had told workers they were being placed on unpaid leave because of the war. But after the International Association of Machinists sought a court injunction, the airline agreed to pay mechanics a severance and consider transfers to another United facility. Officials haven't written off United Airlines. City and state leaders have been aggressively pressing Indianapolis' case with United executives. One hope is that if United launches a low-fare airline as it has proposed, it will maintain those jets in Indianapolis. Officials say the $100 million claim is negotiable. "United has not been forthcoming, which is very frustrating," Kennedy says. "It's difficult to believe they are making decisions based on hard data. We're kind of scratching our heads." Indianapolis Mayor Bart Peterson has appointed a committee to court other tenants for the mammoth complex in case the airline leaves for good. But if what was once the world's biggest airline cannot fill it up, it's not clear what could right now. "We're incredibly disappointed in their decision to close the facility," Moore says. "At some point, we will be in a position to re-let it."