The Toledo-Lucas County Port Authority is negotiating with BAX Global about a possible early-termination agreement that would allow the company to buy out the two years remaining on the lease at its Toledo Express Airport cargo hub after shutting down its local operations Sept. 1.
Port President Paul Toth mentioned the negotiations but provided no further details Thursday morning, reiterating to the port authority's board of directors his belief that the agency is financially prepared to cope with the BAX pullout and has a good chance of finding new business to move into the hub once it is vacated.
"We have assembled a team of professionals working on the BAX facility" whose tasks include both the lease-termination agreement and the search for new tenants, Mr. Toth said.
"We are definitely in a financial position to handle this emergency," John Szuch, chairman of the port directors' finance committee, said after noting that the port authority had retired other bonds earlier this year to reduce its annual debt service from $2 million to just $400,000 to cover payments on bonds the agency issued to finance the BAX hub, which opened in 1991.
Mr. Szuch, appointed to the port board nearly three years ago, said that ever since then, the risk that BAX, formerly known as Burlington Air Express, might leave Toledo after its initial lease expiration in 2013 "has always been a main topic of discussion at finance committee meetings since I came on the board" because of the air cargo industry's sharp decline in recent years.
BAX Global, now a subsidiary of German logistics conglomerate DB Schenker, announced last week its plans to close the Toledo hub, which employs 700 part-time and full-time workers. BAX said it was pulling out of the domestic air-cargo business and would cancel the leases on its fleet of airplanes.
The port authority built the Burlington hub, with the company committed to lease payments to service the debt. But after 2013, the port authority will still owe $9.8 million on the facility, airport committee Chairman Jerry Chabler said during a committee discussion last week.
Mr. Szuch said Thursday that with $3 million having been set aside in reserve against a BAX pullout, the $400,000 to $725,000 it will need annually until 2032 to service the hub debt is manageable, especially if the port authority can find new business to occupy the 340,000 square-foot complex.
Board chairman Opie Rollison, meanwhile, said that despite what has happened, he believes the Burlington/BAX hub was a good deal for Toledo, considering that the port authority received $40 million in revenue over its 20 years of operation and $60 million worth of airport improvement grants supporting it.
"I trust and still firmly believe that our direction is correct," Mr. Rollison said. "It's back to rolling up our sleeves, as we always have done in these situations."