Mark our words: When the city announced last week that warnings from a New York bond-rating firm had forced it to back away from $30 million in publicly financed loan guarantees for fiscally shaky MarkAir, one question was left unanswered: Why did it take so long for the city's beautiful dreamers to get slapped with a financial reality check?
In what they described as an attempt to prevent United Airlines from monopolizing air service in Denver, city airport officials began courting low-fare MarkAir last March, even before the airline emerged from Chapter 11 bankruptcy. The administration's efforts came despite the fact that MarkAir still owed millions in delinquent debt to the state of Alaska, whose taxpayers helped fund an earlier expansion effort--and despite the fact that in 1992 the Federal Deposit Insurance Corporation won a court judgment against MarkAir owner Neil Bergt over $6.2 million in unpaid bank loans. To help satisfy that judgment, U.S. marshals visited Bergt's lavish homes in Alaska and California in the summer of 1993 to confiscate a Cartier watch, sterling-silver flatware and expensive artworks.
Long a controversial figure in the airline business, Bergt made news in 1986 when he agreed to use MarkAir planes to fly supplies to the Nicaraguan Contras for the U.S. State Department. He told an Anchorage newspaper that the flights were a business decision and that he "could care less" if guns were aboard.
Bergt has been spotted schmoozing his way around Denver since city officials began luring him last March. But he may not feel at home following last week's warning from Moody's Investors Service that a deal wedding the city's pocketbook to MarkAir's troubled finances might lead it to downgrade DIA bonds to junk. MarkAir has already said it will drop the idea of relocating its corporate headquarters to Denver--a move Bergt wanted the city to subsidize with between $2 million and $3 million in cash.
Of course, Denver taxpayers are already subsidizing the Alaskan carrier. Last summer the Webb administration's Stapleton 2000 office and the city council handsomely rewarded MarkAir for temporarily locating a telephone reservations center at Stapleton International Airport. Under the six-month "inducement rate," MarkAir gets 10,000 feet of office space for $4 per square foot, compared to an average rate of $30 per square foot for other airline tenants at Stapleton. The deal gets even better for MarkAir if it decides to sign a long-term lease at Stapleton. In that case, it will get to credit any past lease payments toward the new rental agreement--meaning Bergt's company will have received up to seven months of free rent.
Down for the count: Three weeks ago publishing-industry number-crunchers were puzzling over the missing Rocky Mountain News Audit Bureau of Circulation figures, which are usually released within a month of the September 30 closing date. Now those numbers are finally out, with the daily papers engaging in their usual creative interpretations. The News hooks its news to a six-month comparison, which shows the paper gaining. The Denver Post uses September-to-September figures, which show the News losing faster than the Post. The most damning statistic, though, is the six-year comparison that the Post dug up (and, of course, trumpets in its double-page ad), which shows the News with a net gain of just 35 daily papers since 1988. Ouch. But then, back in 1988 you could almost count the Post's circulation on one hand.
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