Lambert Airport, American Airlines Reach Lease Settlement Agreement

Lambert-St. Louis International Airport and American Airlines, Inc. have reached a tentative agreement that will settle American’s financial and operational obligations at the Airport.

American’s parent company, AMR Corporation, is currently dealing with Chapter 11 Bankruptcy and the agreement has to be fully approved.

The City of St. Louis, which owns and operates the Airport, pursued a negotiated settlement, which includes modifying leases with American Airlines, to avoid a rejection of all existing agreements with the city.

Rejection of all agreements could have jeopardized American Airlines service at the Airport and left a lot of upset travelers.

“This is an agreement that, once approved, settles American’s account receivable to the Airport and gives both Lambert and American future stability given the airline’s current financial situation,” said Lambert Public Relations Manager Jeff Lea. “The settlement changes the non-public work space for American, but overall we think this agreement will allow American to continue to serve this Airport and our passengers with no changes to gates, which was very important over the long term.”

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Under the terms of the settlement agreement:

• American Airlines will maintain current operation of four gates in the C Concourse through the full term of its Airport Use and Lease Agreement which expires in June 2016.
• American Airlines will pay $722,811 in total pre-petition debt as well as any outstanding post-petition amounts that are still due to the Airport.
• American Airlines will pay 40 percent of $542,072 each year owed to the City from a Terminal Improvement Memorandum of Agreement. The City will file an unsecured claim for the remaining 60 percent.
• American Airlines will renew its lease of an aircraft hangar through June, 2016 at $461,000/year from the current lease of $227,530/year.
• American Airlines’ tenancy under the Cargo City space lease expires on December 31, 2012 and will not be renewed.
• American Airlines will assume its lease of two jet bridges ($2,577/month).

Job Impacts

American Airlines leased space will be also reduced to approximately 39,000 sq. ft. from nearly 66,000 sq. ft. This will require a decreased support staff.

American announced it was laying-off 164 employees at Lambert in September. Which will have local impacts on workers living in the City of Hazelwood and throughout the area. The furloughs could hit as soon as Dec. 16.

In a letter notifying the state of the layoffs the Kansas City Business Journal obtained, American said it expects the cuts to be permanent.

Of the 164 workers to lose jobs in St. Louis the possible look of staff cuts include up seven airport agents, 36 fleet service clerks and crew chiefs, 11 plant maintenance employees, 82 mechanics, 19 stock clerks, and nine management and support staff, according to the letter.

“Because some of the incentive programs are still open, and because the business changes will take place over several months, we don’t yet have final furlough numbers," American Airlines spokesman Bruce Hicks said in a statement.

Final Approval

The City’s Airport Commission approved the settlement on December 5. The settlement now must be approved by various St. Louis City bodies as well as the St. Louis Board of Alderman before it is submitted to the U.S. Bankruptcy Court for final approval.