Read the settlement: American Airlines and LAX reach agreement over airport charges

American LAX Settlement

American Airlines and the city of Los Angeles apparently got creative in settling their lawsuit over fees the carrier was assessed but did not pay at Los Angeles International Airport, according to a settlement agreement filed in federal court.

As we reported last month, Los Angeles claimed that American had underpaid its rental invoices by $21,556,915.70 since 2011. The money was charged for something called “maintenance and operations,” or M&O, which are fees for services that the airport says are not covered by rental payments.

Every other airline at LAX has been paying these bills, the city noted in court filings. So it always seemed likely that American would pay them too. The question was how the issue would be settled.

I took at a look at the settlement, and below is what I learned. (Of course, I’m no lawyer, so if you see something I have missed, please let me know in the comments section.)

  • American is paying Los Angeles $8 million right away. But the city will also reimburse American for a bunch of improvements the carrier made at LAX in recent years.
  • LAX will credit American with $2 million in exchange for “apron pavement improvements” the carrier paid for between 2010 and 2012.
  • The city will reimburse American almost $4 million for costs related to employee parking. It seems that, at the request of the airport, American switched to an inconvenient parking lot for its employees. The employees must now be bused to American’s operation, and that bus is expensive.
  • American claims it has spent a considerable sum on “design plans” for a building that will connect its Terminal 4 to the Tom Bradley International Terminal. American can get up to $375,000 for this project.
  • American expanded its security checkpoints at Terminal 4 in 2005 and 2011. The city will reimburse the airline for many of these costs.
  • For  those unpaid M&O charges from 2011 through 2013, American will pay Los Angeles $14 million.
  • Effective Jan. 1, 2014, American will pay LAX $42,000 per month for M&O charges. These will pay for: “fire, life and safety systems, heating, conditioning, ventilation systems,” documents show.
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  • Denny Schneider

    So what finally happened? The settlement talks about pluses and minuses and payment will be made in three days, but the final number owed is not specified.