Click photo to enlarge
US Airways pilot Captain Chesley "Sully" Sullenberger, III, right, sits next to his wife Lorrie Sullenberger, left, during the "Danville's Home Town Hero" celebration in Danville, Calif., on January 24, 2009. The celebration was held for Sullenberger, who safely crash landed his US Airways Airbus A320 with 150 passengers in the Hudson River. It is suspected that the jetliner was struck by a flock of birds during takeoff from LaGuardia Airport causing engine problems. (Doug Duran/Staff)

tseipel@mercurynews.com

When top Silicon Valley executives meet Capt. Chesley "Sully'' Sullenberger Friday for lunch and a hard-hat tour of San Jose's gleaming new airport terminal, they won't just be shaking hands with an American hero.

The reason airport officials invited leaders from Adobe, Brocade, Cisco and dozens of other companies is more calculated: They need money.

Facing a looming $32 million debt payment that more than doubles next year — and struggling with a drop in traffic — airport officials are using the "Hero On The Hudson" pilot's visit to ask business leaders to help cover the cost of the terminal's grand opening in June.

"In light of the economic times, and in light of the fact that we are laying off people, I think it would be inappropriate for us to be spending city or airport dollars on grand parties,'' said Bill Sherry, San Jose's aviation director.

Figuring out how to pay for the grand opening is only a part of the problem at Mineta San Jose International. The airport's 125 daily departures are down 34 percent since 2007. And to plug an anticipated $17 million budget shortfall this coming fiscal year, the airport plans to cut more workers, more service and eat into reserves.

It's looking grim enough that airport leaders will be asking the city council to reconsider some controversial issues to make the airport more competitive, such as allowing late-night flights and toughening height restrictions on downtown high-rises.

Nobody saw this coming five years ago, when the city began an ambitious plan to upgrade its charming but outdated airport. Back then, the airport projected 6.1 million passengers and $161.4 million in operating revenues by the time Terminal B opens in June. But now, the number of passengers is projected to be 4.1 million, with $104.5 million in operating revenues. With the bill coming due on the $1.3 billion project, the battered economy couldn't have come at a worse time.

The financial health of the airport has deteriorated enough that Moody's last summer changed Mineta International's financial outlook from stable to negative. Still, analyst Andrew Cleary does not foresee such a cloudy forecast that San Jose would be unable to pay off its bonds.

"The sky is not falling, by any means,'' Cleary said. "They are trying to manage their expenses.''

They are also trying to win some concessions. For the first time, for example, Sherry is asking city officials to temporarily lower the living wage paid to airport workers and the overhead expenses charged by the city for police, firefighters and other airport personnel. Also in the mix is the four-year-old debate over lowering the height of downtown buildings planned for the future to allow more long-haul flights to take off from the nearby airport.

That issue in particular became even more relevant this week after a study by a Virginia-based aviation firm showed that San Jose's airport will be hardest hit among the Bay Area's three airports if and when the state's high speed rail project — that promises to offer cheaper fares — begins operation and steals passengers away. To make up for that anticipated loss of flights from San Jose to Southern California, airport officials say they need to increase the number of flights to places like Hawaii, Europe and Asia. Right now, there are nine weekly flights to Mexico and 12 to Hawaii, but none to Europe or Asia.

Mayor Chuck Reed and the city council will take up the airport's dilemma at a special study session March 8.

"The bottom line,'' Reed said, "is we have to be competitive in our marketplace or we will continue to lose flights.''

Reed said height restrictions could be back on the table and thinks the council will give Sherry direction to bring back a package of solutions.

Not surprisingly, some of the answers are expected to create controversy. Residents who live near the airport — only one of nine in the U.S. that has a noise-based curfew — won't want the 11:30 p.m. to 6:30 a.m. flight-ban lifted. Meanwhile, Cindy Chavez, head of the South Bay AFL-CIO Labor Council, doesn't want to see the living wage diminished for hundreds employed by the airport's tenants or sub-contractors.

"I recognize that the city council is going to have to make those innovative and difficult decisions,'' she said. "At the same time, what's really critical is that we're mindful of not sacrificing the quality of the people who live here and need to be able to afford to stay here.''

And while downtown boosters such as Scott Knies of the Downtown Association understand the need to increase long-haul flights, he believes there is a compromise that can be reached between downtown developers and the airlines. He suggests planes fly over the west side of downtown instead of over its core, where developers want to erect high-rise offices and residential buildings.

"Do they really want to choose between their two favorite economic development 'sons'' — the airport or downtown?'' asked Knies. "It doesn't have to be that way.''

Despite all the gloom, there is some good news to share Friday at Sullenberger's visit, for which airport contractor Hensel-Phelps is picking up the $25,000 appearance fee. The Terminal B opening is on track, operating costs are down and non-airline revenue, such as retail and advertising, is up. Still, it's overshadowed by the drop in passenger levels.

"Like everyone else in this country, we are facing the worst recession since the Great Depression,'' Sherry said. "And that is forcing some decisions to be made now that none of us likes to make.''

Contact Tracy Seipel at 408 275-0140.