Los Angeles World Airports has settled a four-year dispute with its biggest tenant, United Airlines, agreeing to pay the carrier $35 million after reaching a deal for a revised lease.

The agreement calls for United to relinquish four gates at Los Angeles International Airport's Terminal 6 that LAX officials plan to allocate to other expanding airlines. The airline will also give up ownership of the terminal's baggage system. The airport intends to install an in-line baggage security system that other airlines can use.

In addition, United will give up ownership of Terminal 7's customs facilities, allowing LAX to charge airlines higher customs fees.

United, along with receiving cash compensation, will be allowed to keep its small commuter planes at Terminal 8. Previously, the airport had filed a lawsuit over the planes, contending that United was overcrowding the area, endangering passengers by forcing them to walk on the tarmac near passing jets. To improve safety, United will keep the Terminal 8 gates closest to the street and farthest away from jet traffic.

Both parties benefit from the agreement, said LAWA Executive Director Gina Marie Lindsay.

"This will mean improved use of the real estate at the airport, especially at Terminal 6 where airlines could expand," said Lindsay, who noted that discount airline JetBlue will start operating out of the terminal in June. "Although we are paying out a settlement, the end result will be better for our end of the business."

United Airlines officials did not return inquiries for comment. But Jack Keady, an air transportation consultant in Playa del Rey, said that United comes out a winner from the deal.

"I think it's a big plus because of the $35 million and getting to keep the planes at Terminal 8 without prolonging the lawsuit," Keady said. "Whatever they were going to give up was probably not needed anyway, as they are trying to overall consolidate operations amid a slump in passenger traffic."

UAL Corp., parent of United Airlines, posted a $1.3 billion loss in the last quarter of 2008, compared with a loss of $53 million a year earlier.

The exact settlement amount paid to United will be $34,061,895, but airport officials are placing the funds in escrow while United makes the required adjustments at LAX, scheduled to be completed by late August.

Cutting Back Hours

How times have changed.

Back when trade was booming, the ports of Los Angeles and Long Beach jointly established an independent not-for-profit agency called PierPass to develop and manage a program to keep the ports open four weeknights and on Saturdays as a way to reduce truck traffic.


For reprint and licensing requests for this article, CLICK HERE.