United Airlines is abandoning the automated baggage-handling system at Denver International Airport that became notorious for losing or tearing apart luggage.
After more than a decade of trouble with the equipment, the airline said Tuesday it will switch to a cheaper, more conventional manual system by the end of the year.
United will still have to pay $60 million a year under its lease contract for the automated system with the city, United spokesman Jeff Green said. The contract will last for approximately 25 years.
“It has never worked exactly how it was intended to do,” Green said. “We are looking at all areas where we can cut back on costs in our operations in every airport where we operate.”
The airline, which is trying to emerge from bankruptcy protection, expects to save about $1 million a month in operating costs.
The $250 million automated system was intended to be a cutting-edge model but turned into a major problem for DIA. The city, which owns the airport, spent an additional $100 million for construction and $341 million in interest to try to get it to work.
The automated system was an underground, computer-driven railroad network for moving baggage. But bags were misdelivered, luggage was chewed up and cars derailed and jammed tracks. The system was responsible for repeated delays in the opening of DIA, which began operating in 1995.
“They’re finally admitting to reality,” said airline analyst Raymond Neidl. “They wanted to make it work, but they just couldn’t get it to work.”
The automated system was built by BAE Automated Systems of Dallas. In 1996, United sued BAE, claiming the automated system “performed miserably.” Earlier, BAE had sued United for withholding $17.5 million in final payments. Both sides reached a confidential settlement in 1997. BAE was sold to G&T Conveyor Co. in 2002.
Under the manual system, bags will be hauled to a sorting area, where handlers will load them onto carts and haul them to other planes or to baggage carousels.
United filed for Chapter 11 bankruptcy in 2002. The next year, United negotiated the $60 million annual lease agreement with the airport in bankruptcy court, Green said.
Asked if the airline would try to change the lease terms, he said: “That would be between DIA and United and it’s not appropriate for me to comment publicly. We obviously have a desire to cut our costs.”
