Overseas Business a Boon for Lockheed Air Terminal Inc. : Transportation: Growth in the airport development business will come from South America, Asia and eastern Europe, as governments push for modern, Western-style airfields to spur their economies.


Lockheed Air Terminal Inc., one of Lockheed Corp.'s smaller businesses, has been quietly and profitably running Burbank Airport since the 1920s.

But for Lockheed, the future growth in the airport business is overseas. Although the company has slowly expanded to provide services to 20 other U.S. airports in recent years, Lockheed expects business in South America, Asia and eastern Europe to overtake its domestic airport business by the end of the decade, thanks to a burgeoning foreign market for private airport management and development services.

Developing nations are now clamoring for state-of-the-art, Western-style airports, considered a key to economic development. Many countries are considering privatization plans, including Australia, Argentina and Khanty-Mansiysk, a remote outpost of Siberia--all markets where Lockheed Air Terminal has been studying possible airport projects.

"A significant number of international airports will be privately operated and we expect to have our fair share," said Lockheed Air Terminal President Viggo Butler.

Granted, Lockheed Air Terminal is still a small piece within aerospace giant Lockheed Corp., which is headquartered in Calabasas. Analysts estimate Lockheed Air Terminal's annual revenues at under $100 million per year, compared to $13 billion for Lockheed Corp.

At the moment, the only foreign airport Lockheed manages is the Lester B. Pearson International Airport in Toronto, Ontario. The company was a partner in a group that built the $480-million terminal, which opened in 1991 and includes a shopping center. Lockheed is now a minority owner and still manages that terminal, which has been a money maker from the start, the company said.

But the next stage of growth in the airport market worldwide seems to be from developing nations that want to develop modernized airports.

Lockheed is already involved in some airport projects in the former Soviet Union.

In Khanty-Mansiysk, an autonomous oil-producing region of Siberia, the government hired Lockheed to draft a development scheme for a new terminal. Currently, Khanty-Mansiysk depends on barges to transport cargo, but its waterways are frozen all but four months a year, so the region needs an airport ready to handle cargo year-round.

In Turkmenistan, in the former Soviet Union, Lockheed led a consortium that is now finishing a $150-million runway and airport terminal, installing everything from conveyor belts to handle baggage, to air conditioning in the sweltering airport.

Regions once geared only for travel behind the iron curtain must now update their airports to accommodate Western air traffic, said Robert Aaronson, executive vice president of Lockheed Air Terminal.

"Airports, unlike most other infrastructure, generate most their revenues in hard currency--hard, foreign currency," which is why developing nations are interested in privatizing airports, said Robert Poole, president of the Reason Foundation, a Los Angeles-based, economic think tank which specializes in privatization issues.

Meanwhile, more developed countries are privatizing their airports in search of cheaper ways to run or expand airports. The Australian government may sell some of its 23 airports to the private sector. Lockheed Air Terminal would like to bid on the Australian airports if they are put up for sale, and the company is looking into similar projects in Eastern Europe, South America and Asia.

In the airport development and management business, Lockheed Air Terminal "is really the only real U.S. player on a world scale now," according to Poole.

But others are hastening to get in on the boom. A unit of Hughes Aircraft Co. is completing negotiations with the airport authority of Trinidad and Tobago. Hughes will lead an international team that will build a new $80-million terminal in that sunny, oil-producing, former outpost of the British empire.

And Hughes said it has completed studies for the Ukraine on ways to upgrade that country's airports. One reason is that the Ukraine wants to transform the Crimea, site of successive military invasions, into a tourist hot spot, said Dan Reeder, spokesman for Hughes Aircraft Co.

Analysts say the airport market overseas should be plenty to keep Lockheed Air Terminal busy.

The company is girding itself for further expansion. Since last fall, four new executives, including Aaronson, have been brought in to help steer the company into international markets. Aaronson is the former president and executive officer of the Air Transport Assn. of America, and was also director of aviation at the Port Authority of New York and New Jersey, where he was responsible for management of Kennedy International and La Guardia airports.

Lockheed Air Terminal is also awaiting word on its bid for a contract to supervise construction of a new airport terminal in Istanbul, Turkey. Lockheed has been asked by governments in Hungary, Argentina and Venezuela to make suggestions for possible airport improvement projects. And the company has completed a study on a possible new airport terminal in Beijing, China, again at the government's request.

Driving the market for private airport projects abroad are governments that aspire for economic growth, but don't have the means to provide the infrastructure. Poorer nations are under pressure from the International Monetary Fund to avoid debt, and many see privatization as an alternative.

"Developing nations are recognizing that airports are a part of economic development and they see airport expansion as a key," said Hensley Evans, manager of the international privatization group of Price Waterhouse in Washington, D.C.

But the emerging airport market overseas, though promising, is marred by political uncertainties, warned Wolfgang Demisch, analyst for BT Securities Corp. In Canada, after last year's parliamentary elections, the new government withdrew from an agreement to hire private companies, including Lockheed, to revamp two more terminals at the Toronto airport.

But Lockheed Air Terminal's Butler said that the risks of airport development and management are not as great as in other enterprises. After all, an airport amounts to a public utility, and so "You have a certain measurable traffic that goes through these cities and you can predict over time what that traffic will be," he said.

The company's roots in the airport business date back to 1929 when it was called United Airport Co., then a part of United Airlines. The company was sold to the Lockheed Corp. in 1940, said Butler, and it once owned and operated Burbank Airport. In 1978, it sold the airport to the Burbank-Glendale-Pasadena Airport Authority, but Lockheed stayed on as airport manager and now manages the complex there, overseeing aviation safety, maintenance, construction and a host of other operations.

Although Lockheed Air Terminal's attention is mostly focused overseas, the company still hopes to line up more domestic contracts.

When Richard Riordan ran for mayor, he talked of leasing all or part of Los Angeles International Airport to the private sector to raise additional money for the city. The suggestion has since been shelved, but not for lack of effort by Lockheed Air Terminal. The company poured $158,000 into lobbying city officials for privatization in 1993--the second largest corporate lobby to the Los Angeles city government that year.

And if Mayor Riordan ever revives his plans to privatize LAX, Lockheed officials promise they'll be first in line to bid on that project too.

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